Baxter has gotten torched over the last six months - since March 2025, its stock price has dropped 32% to $22.86 per share. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Is there a buying opportunity in Baxter, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Baxter Will Underperform?
Even with the cheaper entry price, we're sitting this one out for now. Here are three reasons you should be careful with BAX and a stock we'd rather own.
1. Long-Term Revenue Growth Flatter Than a Pancake
A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Baxter struggled to consistently increase demand as its $10.89 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and signals it’s a low quality business.
2. Weak Constant Currency Growth Points to Soft Demand
We can better understand Medical Devices & Supplies - Diversified companies by analyzing their constant currency revenue. This metric excludes currency movements, which are outside of Baxter’s control and are not indicative of underlying demand.
Over the last two years, Baxter’s constant currency revenue averaged 4% year-on-year growth. This performance slightly lagged the sector and suggests it might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability. 
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Baxter, its EPS declined by 3% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.
Final Judgment
Baxter doesn’t pass our quality test. After the recent drawdown, the stock trades at 8.8× forward P/E (or $22.86 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. Let us point you toward a fast-growing restaurant franchise with an A+ ranch dressing sauce.
Stocks We Would Buy Instead of Baxter
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