Baxter (BAX) Recession Resilient with Cash to Boot - Barron's
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Baxter International (NYSE: BAX), a company that pioneered the process of separating blood plasma into component parts and now specializes in the manufacture of hemophilia and autoimmune disorder treatments, could be a great addition to your portfolio, according to a recent Barron's article. The company currently has about two dozen products in development and has, besides last quarter, beaten profit expectations every quarter going back to 2004.
The new products in development could add $6 billion in revenues to Baxter's income statement, and bolster its ever-growing cash position.
An analyst from PNG Capital Advisors believes that the company isn't getting any respect from Wall Street, despite continual double-digit earnings growth in most any environment.
UBS and Piper Jaffray increased their price targets on the stock in late January to the low $70's, am 18 - 19% premium from today's trading price of $59.
Additionally, Lone Pine Capital reported taking on a large position in the company on their recent U.S. SEC 13F filing.
Gammagard and other antibody replacement therapies for malfunctioning immune systems account for about 10% of Baxter's revenue.
Drug sales generated 44% of total revs for the company last year, but with annual revs of $12.5 billion Baxter flexes its muscle beyond just drugs. The company reported 37% from IV equipment and $2.3 billion from kidney disease treatments.
Being a prime resource for the treatment of life-threatening diseases helps keep Baxter afloat even during a recession.
According to Morgan Keegan, cash flow could double to $4 billion by 2014, and over the next five years, the company plans on spending 35 - 40% of capital on share repurchases and increased cash dividends.
One key element goes back to Gammagard, an Alzheimer's disease treatment. The drug isn't expected to be approved or on the market before 2014, but when it hits, its going to hit, some analysts say. The product could be the leader in a $3 billion-per-year market that should grow as the baby-boomer generation continues to age. A phase III is currently underway.
The company currently trades at 13.9x FY10 estimated earnings, compared to 14.5x for Talecris Biotherapeutics (NASDAQ: TLCR), 12.8x for Abbott Labs (NYSE: ABT), 14.6x for Covident (NYSE: COV), and 15.3x for Becton, Dickinson and Co. (NYSE: BDX).
Challenges that Baxter is facing include the recall of some HomeChoice dialysis machines by the U.S. FDA and fixing some issues at their Belgium manufacturing plant.
With a strong international presence [57% of revs last year came from outside the U.S.], 25 projects in the pipeline, a promising Alzheimer's treatment, and gobs of cash on the balance sheet, Baxter may be just the defensive play for a sound portfolio.
The new products in development could add $6 billion in revenues to Baxter's income statement, and bolster its ever-growing cash position.
An analyst from PNG Capital Advisors believes that the company isn't getting any respect from Wall Street, despite continual double-digit earnings growth in most any environment.
UBS and Piper Jaffray increased their price targets on the stock in late January to the low $70's, am 18 - 19% premium from today's trading price of $59.
Additionally, Lone Pine Capital reported taking on a large position in the company on their recent U.S. SEC 13F filing.
Gammagard and other antibody replacement therapies for malfunctioning immune systems account for about 10% of Baxter's revenue.
Drug sales generated 44% of total revs for the company last year, but with annual revs of $12.5 billion Baxter flexes its muscle beyond just drugs. The company reported 37% from IV equipment and $2.3 billion from kidney disease treatments.
Being a prime resource for the treatment of life-threatening diseases helps keep Baxter afloat even during a recession.
According to Morgan Keegan, cash flow could double to $4 billion by 2014, and over the next five years, the company plans on spending 35 - 40% of capital on share repurchases and increased cash dividends.
One key element goes back to Gammagard, an Alzheimer's disease treatment. The drug isn't expected to be approved or on the market before 2014, but when it hits, its going to hit, some analysts say. The product could be the leader in a $3 billion-per-year market that should grow as the baby-boomer generation continues to age. A phase III is currently underway.
The company currently trades at 13.9x FY10 estimated earnings, compared to 14.5x for Talecris Biotherapeutics (NASDAQ: TLCR), 12.8x for Abbott Labs (NYSE: ABT), 14.6x for Covident (NYSE: COV), and 15.3x for Becton, Dickinson and Co. (NYSE: BDX).
Challenges that Baxter is facing include the recall of some HomeChoice dialysis machines by the U.S. FDA and fixing some issues at their Belgium manufacturing plant.
With a strong international presence [57% of revs last year came from outside the U.S.], 25 projects in the pipeline, a promising Alzheimer's treatment, and gobs of cash on the balance sheet, Baxter may be just the defensive play for a sound portfolio.
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