Time for a Nice Shot in the Arm

Barron’s has good things to say about one of our Buy List stocks, Baxter International (BAX):

The giant health-care company, which specializes in blood-protein treatments and medical-delivery systems for hemophilia, infectious diseases and kidney failure, among other ailments, is one of the few large-cap companies that delivered double-digit earnings growth last year. Even better, it is expected to give a repeat performance this year.
Baxter (ticker: BAX) has forecast 2009 sales growth of 7%, excluding any foreign-exchange impact, and fully diluted earnings of between $3.70 and $3.78 a share, before any special items, up from $3.38 last year. Cash flow for the full year is expected to exceed $2.6 billion.
In an investment sector that is, by its nature, defensive, Baxter could be a real winner, with growth prospects that look unusually alluring at a time when more investors are seeking stocks perceived to be safe.
Compared with the erosion in the broader market, the shares have been a bastion of strength the past 52 weeks, trading until days ago at roughly the same level they did a year earlier, and representing a market value of about $32 billion. At about 52 Friday, the stock was changing hands at 14 times estimated earnings for ’09 and about 12.3 times the forecast for ’10.
There’s a strong case for the shares to reach 65 by year’s end, or nearly 20% above current levels, based on strong earnings growth, margin expansion and continuing share buybacks. Bulls note that management has a habit of providing conservative guidance, and that Baxter could well exceed its current expectations of 10% to 12% earnings growth.

Posted by on February 28th, 2009 at 2:19 pm

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