Baxter International Poised for Financial Improvement with Strong EPS Growth and Margin Enhancements

David Roman, an analyst from Goldman Sachs, has initiated a new Buy rating on Baxter International (BAX).

David Roman has given his Buy rating due to a combination of factors that suggest Baxter International is poised for financial improvement. The company is expected to see significant enhancements in its margins and cash flow starting in the second half of 2025, which aligns with a projected 12.5% compound annual growth rate in earnings per share over the next three years.
Despite not relying on an expansion of the price-to-earnings multiple to justify the upside, Roman notes that if Baxter can reduce its leverage more quickly, increase cash returns to shareholders, or find specific growth drivers, there could be further valuation benefits. Key elements of this positive outlook include stabilization in revenue growth, normalization of operating margins, sustained double-digit EPS growth, and a turning point in free cash flow in the latter half of 2025.

In another report released yesterday, Argus Research also upgraded the stock to a Buy with a $40.00 price target.