Sunday, December 22, 2013

Baxter International Is An Undervalued Dividend Growth Machine

Best of all it appears severely undervalued for a firm this size. It seems the short term minded market isn't at all concerned with long term growth. Here's a snip, read the entire report only at Seeking Alpha here.
For a company expecting long-term earnings to grow at 8% to 10%, Baxter International (BAX) is looking mighty cheap today. Using the low end of the company's topline growth projections with recent operating margins improving at 25 basis points annually gives the company a fair value north of $85, using a DCF model. Even after the recent pop from winning both an FDA approval and a CE mark on Dec. 19 and 20 respectively, Baxter appears undervalued by more than 20%.
Diverse, not sprawling
Baxter's operations are split nearly evenly between its BioScience and Medical Product segments. As a medtech firm, Baxter doesn't command a share of the market anywhere near that of Johnson & Johnson (JNJ) or Medtronic (MDT), but it has carved out a nice sized corner.
Its $3.9 billion acquisition of Swedish dialysis competitor Gambro should quickly be giving the company a large share of the European dialysis market. Analyst consensus provided by the Evaluate Group puts growth of the company's medtech segment at around 9% just below management estimates of 10%.
 See the complete report here.