Baxter International Inc. (BAX): A Bull Case Theory

Core Thesis - Baxter International Inc. is viewed positively despite recent setbacks, with the stock trading at $19.29 and a forward P/E of 8.12, indicating potential undervaluation [1][2] Company Overview - Baxter operates in essential medtech markets such as IV solutions and infusion pumps, characterized by non-discretionary demand and strong customer relationships [2] - The stock has reached multi-decade lows due to recent challenges, but the selloff is seen as peak capitulation rather than a sign of structural issues [2] Recent Performance - Under new CEO Andrew Hider, Baxter reset expectations in Q3 by cutting guidance, reducing the dividend to save over $300 million annually for deleveraging, and acknowledging slower recoveries in IV fluids and the Novum IQ infusion pump [3] - Reported sales missed lowered expectations, with full-year growth revised to 1-2%, but margins improved, free cash flow turned positive, and operating discipline strengthened [3] Market Position and Outlook - The challenges affecting sentiment are considered temporary and fixable, with the Novum IQ pump previously gaining market share, and IV fluid production fully restored [4] - Demand for capital spending from hospitals remains strong, tariffs are manageable, and deleveraging efforts are on track [4] Strategic Direction - Hider is implementing operational rigor similar to Danaher, positioning Baxter for a self-help story leading into a 2026 investor reset [5] - The stock is trading at approximately 9-10x forward earnings, presenting an asymmetric risk-reward opportunity as temporary issues are mispriced as permanent impairments [5]