UPDATE: Baxter Targets Long-Term Double-Digit EPS Growth
September 16 2009 - 11:10AM
Dow Jones News
Baxter International Inc. (BAX) issued long-range financial
goals on Wednesday that continue to target double-digit earnings
growth over the next five years while the company ramps up spending
in research and development.
The maker of medical products targeting serious conditions such
as hemophilia and kidney failure is holding an all-day investor
conference in Chicago Wednesday to review its financial goals and
research efforts. In a release ahead of the meeting, Baxter said it
expects to boost sales by about 7% to 8% over the next five years,
excluding the impact of foreign currency, while boosting earnings
per share by about 11% to 13%.
Baxter officials described this as a "base-case" forecast that
the company could exceed if certain key "wild card" development
efforts that aren't factored into guidance - such as development of
a treatment for Alzheimer's disease - bloom.
"Obviously our aspiration is to grow sales at a faster rate than
our base-case plan," Robert M. Davis, Baxter's chief financial
officer, said during the conference.
Shares of the Deerfield, Ill., company recently traded up 19
cents to $56.14.
The new sales and earnings targets are similar to those
announced in early 2007, and Credit Suisse analyst Kristen Stewart
said earnings growth at this rate "seems like a reasonable
target."
In March 2007, Baxter said that through 2011, it expected annual
sales of at least 6% to 8% and per-share earnings growth of at
least 11% to 13%.
The company's latest long-range forecasts also call for
generating annual cash flow of about $4 billion by 2014 and
increasing investment in research and development by at least an 8%
to 10% compound annual rate.
"We believe we have a balanced outlook and are well-positioned
to achieve our results while making appropriate investments to
enhance future growth and delivering value to shareholders," Robert
L. Parkinson, Jr., the company's chairman and chief executive, said
in the release.
During his presentation, Parkinson said Baxter is less
vulnerable than many medical companies to potential changes in U.S.
health-care policy. He also noted that the company remains well
insulated against economic turmoil by the "medically necessary
nature of our products."
Regarding potential acquisitions, Parkinson said Baxter
continues to focus on smaller-scale "bolt-on" deals. He said the
pace of deal-making is likely to pick up, but that "the notion of a
big megadeal" isn't in Baxter's plans.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com