What Happened?
Shares of healthcare company Baxter International (NYSE: BAX) fell 2.9% in the afternoon session after the stock continued to fall as the company reported mixed third-quarter results, lowered its full-year guidance, and announced a plan to reduce its dividend. While adjusted earnings per share of $0.69 beat expectations, revenue of $2.84 billion fell short of forecasts. The positive earnings were overshadowed by several concerns. The company's gross margin plunged due to product mix shifts and higher manufacturing costs. Baxter also lowered its 2025 adjusted earnings outlook to a range of $2.35 to $2.40 and trimmed its full-year sales growth target. Adding to the issues, the company faced ongoing operational problems, including a shipment hold for its Novum IQ Large Volume Pump. Finally, Baxter said it would slash its quarterly dividend starting in January 2026 to free up cash to pay down debt.
The shares closed the day at $18.47, down 3.7% from previous close.
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What Is The Market Telling Us
Baxter’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 13.5% on the news that the company reported disappointing third-quarter financial results, which included a miss on revenue and a weak outlook. While its adjusted earnings of $0.69 per share surpassed analysts' expectations, investors focused on the negatives. The medical device maker's revenue of $2.84 billion fell short of forecasts. Adding to concerns, Baxter issued revenue guidance for its fourth quarter that was well below consensus estimates and also lowered its full-year adjusted earnings guidance, signaling potential challenges ahead. The report also showed that cash generation weakened, with the company's free cash flow margin falling to 4.4% from 8.6% in the same period last year. This combination of a sales miss and a cautious forecast led to a significant sell-off in the shares.
Baxter is down 36.9% since the beginning of the year, and at $18.47 per share, it is trading 49.5% below its 52-week high of $36.57 from March 2025. Investors who bought $1,000 worth of Baxter’s shares 5 years ago would now be looking at an investment worth $234.78.
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