Baxter Turns In Solid Q4; Shares Down on Weak Near-Term Guidance

Narrow-moat Baxter reported fourth-quarter results that helped it roughly meet our 2021 expectations, and management's bottom-line guidance for 2022 was in line with our estimates, too. At first glance, when incorporating a lower long-term U.S. corporate tax rate than we previously expected and including cash flows generated since our last valuation update, we may raise our fair value estimate slightly. However, the shares are declining by midsingle digits in early trading on management's weak outlook for the first quarter related to short-term challenges, including the omicron variant and inflationary pressures. This share movement appears shortsighted to us.