Baxter International Inc.

Baxter International’s fourth quarter performance fell short of the expectations of its management as well as Wall Street. Foreign exchange losses and the product mix throughout the quarter were the primary reasons for a rather disappointing result. Demand for its products and therapies remained strong, but supply chain constraints limited its ability to completely meet this demand. Backorders and backlog reached new highs, particularly in the legacy Hillrom company. Sales during the fourth quarter were $3.9 billion, increasing 2% operationally, 17% at constant currency, and 11% reported-on-basis. Sales also increased across the majority of its historic Baxter and Hillrom companies as demand throughout its portfolio remained strong, balancing slight or anticipated decreases in some businesses due to factors including general competition or difficult year-over-year comparisons. Moreover, Renal’s global revenues increased by 3% to $981 million, driven by strong growth in the PD business. Baxter’s smart infusion pumps also continue to be in high demand. Given the robust international demand, their IV therapy portfolio rose in the low single digits. While the management saw encouraging progress and supplier availability in Q4, they expect component availability to remain difficult and impede top-line sales in 2023. We give Baxter a ‘Hold’ rating with a revised target price.