Baxter (NYSE:BAX) yesterday said it hopes to grow earnings per share to $3 over the next 4 years, as it looks to improve its operating margins and grow the top line.
The Chicago-area healthcare giant said it expects to post adjusted EPS of 2.10 to $2.25 in 2018, on sales growth of 3% to 4% on a compounded annual basis at constant currency rates from 2016 through 2018. Adjusted EPS in 2020 are expected to reach $2.75 to $3.00 per share on sales growth of 4% on a constant-currency compounded annual basis from 2016 to 2020.
Adjusted operating margins in 2018 are forecast to be 14% to 15%, rising to 17% to 18% in 2020.
“Baxter’s strong portfolio of products, promising pipeline, channel strength, and global presence position the company to deliver important medical innovations to drive growth and deliver returns in line with our aspirations,” chairman & CEO Joe Almeida said in prepared remarks. “We’re pleased to update our financial outlook, which represents a meaningful improvement compared to our prior expectations. Baxter’s goals build on the strength of our recent performance and our prospects for growth.”
“In addition to our updated financial outlook, the successful deployment of Baxter’s retained stake in Baxalta provides the flexibility to invest directly in the business to support our growth aspirations while also returning value to shareholders through dividends and opportunistic share repurchases,” added CFO Jay Saccaro.
The consensus estimate on Wall Street for 2016 is adjusted EPS of $1.65 on sales of $10.1 billion.
Leerink Partners analyst Danielle Antalffy said that Almeida is likely to focus on selling or buying businesses as well as execution in driving the company toward its goals.
“Based on his track record, new CEO Almeida likely will not only focus intently on improving execution, but also portfolio optimization – whether through shedding lower-growth, lower-margin businesses or acquiring higher-growth, higher-margin businesses. While Almeida emphasized that a ‘transformative’ deal isn’t likely on the docket in the near term, we do expect BAX to be fairly nimble here,” Antalffy wrote this morning in note to investors. “Almeida again reiterated his focus on potential adjacencies that: (1) accelerate the weighted average addressable market growth for BAX; and (2) are accretive to the bottom-line. If successful in executing on the M&A front – which, again, Almeida has proven to be in the past – BAX is very well-positioned to exceed its just-raised long-term sales growth and operating margin targets.”
BAX shares were down -.06%to $44.86 apiece today in late-morning activity.