UPDATE 3-Baxter posts higher earnings, matches Street view

* Net share 94 cents vs 91 cents

* Matches Wall Street forecast
(Adds conference call, analyst comment, byline, updates
stock)

By Debra Sherman

CHICAGO, Jan 28 (BestGrowthStock) – Medical products maker Baxter
International Inc (BAX.N: ) reported higher quarterly earnings,
matching analysts’ forecasts, as each of its three business
units posted double-digit sales growth.

Yet shares in Baxter slipped $1.18 to $57.73 in early
trading after the company dashed Wall Street’s hopes for a
beat, sounded a slightly cautious tone on the conference call
with analysts, and acknowledged that it lost some share in the
market for plasma proteins last quarter.

In addition, during the conference call, the company
disclosed a warning letter it had received from U.S. health
regulators about its manufacturing facility in Belgium.

In the letter, which will probably be made public in the
next few days, the U.S. Food and Drug Administration identified
improvements needed for the filling and finishing of Gammagard
liquid, a drug used to treat immune deficiency.

Chief Executive Robert Parkinson told analysts that there
have been no adverse effects or complaints associated with the
issues nor have there been interruptions in operations.

“We’re taking it seriously as we should. but I don’t think
it’s anything to be alarmed about,” Parkinson said.

The maker of intravenous drug pumps, blood therapy products
and devices used for kidney dialysis also forecast
first-quarter and full-year earnings that were within analysts’
expectations, but the consensus was at the top end of that
range.

“While some may be disappointed with this outlook, we would
remind investors that Baxter is traditionally very conservative
with its initial outlook, routinely underpromising and
outperforming when it’s all said and done. We don’t expect 2010
to be any different,” JP Morgan analyst Michael Weinstein wrote
in a research report.

“This is classic Baxter guidance,” added Piper Jaffray
analyst Matt Miksic, noting that the top end of the forecasted
range is the consensus on Wall Street. “That’s typical.”

In the fourth quarter, Baxter earned $572 million, or 94
per share, compared with $569 million, or 91 cents per share a
year ago.

Excluding items, it earned $1.03, matching the average
estimate on Wall Street, according to Thomson Reuters I/B/E/S.

Total fourth-quarter sales rose to $3.5 billion from $3.1
billion in the year-ago period, with U.S. sales up 5 percent
and sales outside the United States up 15 percent. Excluding
the impact of foreign currency (Read more about trading foreign currency., international sales grew 7
percent.

In addition to strong sales growth, margin expansion and
the company’s ongoing share buyback program drove EPS growth.

For the first quarter of 2010, Baxter forecast sales
growth, excluding the impact of foreign exchange, of 5 percent
to 7 percent. Including the benefit of foreign exchange, the
company expects to report sales growth of 10 percent to 12
percent year over year, based on current exchange rates.

Baxter forecast earnings per diluted share of 92 cents to
94 cents, before items.

For full-year 2010, Baxter expects sales, excluding the
impact of foreign exchange, to increase 5 percent to 7 percent.
Including the benefit of foreign exchange, Baxter sees sales
growth of 7 percent to 9 percent over a year ago, assuming
exchange rates stay the same.

The company forecast earnings per diluted share of $4.20 to
$4.28, before special items, and expects to generate cash flow
from operations of about $2.9 billion.

“While no company, including Baxter, is completely immune
to the micro-environment, given the medically necessary nature
of our products, our diversified healthcare model and strong
market positions, we’re confident in our ability to drive
improved performance,” Parkinson said.

Investing Advice
(Reporting by Debra Sherman, editing by Maureen Bavdek and
Gunna Dickson)

UPDATE 3-Baxter posts higher earnings, matches Street view