Baxter International raises outlook after third-quarter earnings beat expectations

Baxter International Inc.’s third-quarter earnings beat Wall Street expectations Thursday, propelled by a jump in sales in the company’s IV solutions business. After the company’s earnings release, Baxter’s stock price rose by more than 3 percent.
The Deerfield-based medical supply and pharmaceutical company posted earnings of $594 million, or $1.01 per diluted share, in the quarter ended Sept. 30, besting Wall Street’s consensus projections of 97 cents.  Net income rose 12 percent from the same quarter in 2009, when the company earned $532 million, or 87 cents per diluted share.
In the 2009 quarter, the company incurred a one-time charge of $27 million for the retirement of a syringe pump.  Without that cost, 2010 third-quarter earnings would have been 1 percent lower than 2009.
Still, the company raised the floor of its 2010 annual forecast from $3.93 to $3.96 per diluted share, and now expects 2 percent to 3 percent annual sales growth. Its previous forecast called for growth in the range of 1 percent to 3 percent.  The top forecast figure remained at $3.98.
“We continue to aggressively manage general administrative and discretionary spending across the company,” Robert Parkinson, Baxter’s chairman and chief financial officer, said in a Thursday morning conference call.  “We’re selectively investing in several key promotional activities aimed at demand creation, new product launches and driving future growth of our higher margin products.”
Baxter’s third-quarter revenue grew by 3 percent to $3.2 billion from last year’s $3.1 billion.  The medical delivery sector, which manufactures intravenous solutions and sets, intravenous nutritional products, medical pumps and drug manufacturing products, spurred much of the company’s third-quarter momentum by racking up $1.2 billion dollars in sales, up 2 percent globally and 12 percent domestically.
The company’s bioscience division also is outperforming analysts’ expectations, led by developments in critical-care blood plasma replacement therapeutics. Sales at the division did not grow significantly during the quarter but have grown 3 percent so far this year, totaling $3.4 billion.
“We view this commentary, quarterly results, and outlook as all positives for the company and encourage investors to revisit what should be a core holding in the healthcare space,” said Daniel Owczarski, a financial analyst with Avondale Partners LLC.
In the first nine months, Baxter has earned $1.1 billion, or $1.79 per diluted share, down 35 percent from the same period last year, when the company earned $1.7 billion, or $2.66 per diluted share. Revenue, rose 3 percent to $9.3 billion, compared with last year’s $9.1 billion.