Baxter International (NYSE:BAX) is trading lower in the pre-market Friday on below-average volume after Wells Fargo downgraded the health equipment maker to Equal Weight from Overweight, noting pressure on the near-term outlook.
In addition to a potential downside to sales and earnings in 2Q and 2022, the analysts led by Larry Biegelsen highlight overly bullish Street forecasts for 2023.
On 2Q and 2022, the analysts noted that Baxter (BAX) would experience inflationary pressure from surging oil prices and continue to see supply chain challenges with few offsets.
“We see 2023 as a transition year given the multiple headwinds resulting in sales and EPS growth at or below the low end of the LRP targets,” the team added, projecting a rise in the company’s interest expense in 2022-23 amid the ongoing rate hikes.
However, the analysts expect the company’s LRP for 2022-25 to remain on track with 4-5% and low-double-digit compound annual growth rates for operational sales and earnings per share, respectively.
The price target lowered to $71 from $90 per share implies only a ~9% premium to the last close.
Wall Street remained modestly bullish on Baxter (BAX) stock, with an average rating of Buy from analysts in line with Seeking Alpha Author ratings. However, Seeking Alpha’s quant system, which consistently beats the market, rated BAX as a Hold.
Source: seekingalpha.com