Analyst Note| Julie Utterback, CFA |
Narrow-moat Baxter roughly met expectations for the third quarter, but it trimmed its 2022 outlook for the third time in as many quarters to slightly below our expectations on an adjusted basis. Although this mild change has not materially affected our $85 fair value estimate, investors appear to be discounting Baxter shares below fair value because of the company's position on the front lines of any economic slowdown that affects global hospitals. While Baxter's near-term financial prospects are murkier than usual, we suspect its long-term prospects have not changed much. We think long-term investors should consider recent share weakness as an opportunity to invest in a high-quality medical supplier at a cheap price.