Baxter International (BAX) Q2 Earnings: What's In Store?

Baxter International Inc. (NYSE:BAX) is scheduled to report second-quarter 2016 earnings on Jul 26. Last quarter, Baxter reported earnings of 36 cents per share, which beat the Zacks Consensus Estimate of 7 cents by 24.1%.

Notably, the company’s earnings have topped the Zacks Consensus Estimate in the last four quarters, by an average of 27.65%.

Let’s see how things are shaping up prior to this quarter.

Factors at Play

For the second quarter of 2016, Baxter expects sales growth of 4% at cc. Adjusted earnings are forecasted in the range of $0.38 to $0.40 per share.

We believe that Baxter’s expanding product pipeline is a key growth catalyst. Newly launched products like SIGMA SPECTRUM infusion pump and AMIA APD cycler with SHARESOURCE two-way connectivity are expected to drive top-line growth in the quarter.

The Renal business is predicted to be a pivotal growth driver. Baxter is focused on expanding its end-stage renal disease (ESRD) product portfolio. Aging population, expanding access in emerging markets and growing adoption of home therapies are the main catalysts.

We also anticipate continuing robust performance from the IV solutions in the quarter. Moreover, the ongoing restructuring program will help in reducing operating expenses.

However, intense competition and lackluster hospital spending are major concerns. Additionally, foreign currency volatility is expected to hurt the company’s overall results in the near term.

Earnings Whispers

Our proven model does not conclusively show that Baxter is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Baxter has a 0.00% ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 39 cents.

Zacks Rank: Baxter carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:

Nektar Therapeutics (NASDAQ:NKTR) with an Earnings ESP of +50.00% and a Zacks Rank #1.

Zoetis Inc. (NYSE:ZTS) with an Earnings ESP of +2.27% and a Zacks Rank #1.

Zimmer Biomet Holdings Inc. (NYSE:ZBH) with an Earnings ESP of +1.02% and a Zacks Rank #2.