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Baxter's Spin-Off Strategy Is Promising

Although 2015 may be rocky, both Baxter and Baxalta should see significant margin expansion and growth in the long term, says Morningstar's Karen Andersen.


Karen Andersen: Baxter (BAX) is a diversified health-care company that currently holds a 4-star rating and is trading at about a 15% discount to our fair value estimate.

2015 is a transitional year for the company in many ways. As a global company, it has more than half of its sales outside the U.S., so it is seeing significant currency headwinds this year from the strong dollar. It is also losing share for a very profitable cancer drug due to some new competition. Most importantly, though, investors are really busy trying to think about the future of the new Baxter, as it is planning to spin off its bioscience arm, Baxalta, in July.

Karen Andersen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.