Baxter (BAX) Fears 'Exaggerated' Says Goldman Sachs

October 23, 2013 11:10 AM EDT
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Price: $46.45 --0%

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Goldman Sachs maintained a Conviction Buy on Baxter International (NYSE: BAX) with a price target of $86.00. Analyst David H. Roman thinks fears about competition are exaggerated.

"Since September 1, BAX shares have underperformed the S&P 500 by 1,360bp as fears over new competition to Baxter's rFVIII franchise (Advate, Recombinate) have intensified. At current levels, BAX shares seem to be pricing in close to a worst case scenario, which we peg at $62 (5% downside potential)," said Roman.

"Hemophilia is a highly nuanced condition in terms of patient-specific therapeutic regimens and requires intensive self-management. We have undertaken a behavioral analysis to assess the dynamics around switching and the logistics involved. To our knowledge, this is not a view point that has been considered in consensus thinking . . . Based on a review of physician office visits and a detailed patient demographic build, we think a reasonable rate of switching would approximate 10%-20% (of US Prophy patients) and could potentially reduce Baxter's 2015E EPS by 1-2%. This is reflected in our published numbers and there is likely room for some upward revision," he added.

For an analyst ratings summary and ratings history on Baxter International click here. For more ratings news on Baxter International click here.

Shares of Baxter International closed at $65.30 yesterday.

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