It was not a good morning for Baxter International (NYSE:BAX) after its earnings report emerged. This healthcare stock that focuses on kidney disease plunged through Thursday morning, and recovery in afternoon trading was tepid at best. While the earnings report hit this stock hard, Baxter has plans for a comeback.
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Baxter’s biggest hit came from underwhelming guidance for both the first quarter and the full year of 2023. Baxter expected adjusted earnings to hit between $0.46 and $0.50 per diluted share, while analysts expected $0.76. As for the full year, it guided for $2.75 to $2.95 compared to forecasts of $3.58. Baxter’s biggest reason behind the sub-par guidance was overall issues of the larger economy. Further, based on remarks from CEO Jose Almeida, supply chain issues would also continue to weigh on overall performance.
As for Baxter’s plan to recover, it involves job cuts. Reports noted that the firm looks to cut as much as 5% of its total workforce and will consolidate the rest of the workers into four units. Baxter will start reporting using those new units sometime in the second half of this year. The move should produce better than $300 million in savings through 2023.
Wall Street may be disappointed with Baxter’s projections, but it’s not abandoning the stock altogether. In fact, current analyst consensus calls it a Moderate Buy. With an average price target of $56, BAX stock comes with 39.65% upside potential.