$BAX Stock Rising Large Player Interest

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BAX stock is moving higher on increasing large players buying. The large players’ interest seems to be coming from the acquisition of Hill-Rom.

BAX Stock Technical Analysis September 3 2021

BAX stock does NOT look like a good entry at the moment, as the stock has already spike massively higher. It is better to wait for a pullback or consolidation IMO. The large players’ volume and Twiggs Money Flow look great!

Bax Stock Chart

Please review what large players’ volume is in this lesson on large players volume.

Barclays upgrades BAX stock with $100 target after Hill-Rom deal

On September 3, 2021, Barclays analyst Travis Steed upgraded BAX stock to Overweight from Equal Weight with a price target of $100, up from $93, after the company agreed to acquire Hill-Rom (HRC). The analyst is more confident in Baxter’s revenue growth, margin expansion, and potential earnings power with Hill-Rom than without. He now thinks there is more upside risk to earnings estimates than downside risk. Hill-Rom “de-risks” the Baxter story and creates opportunity, says Steed, who sees 25% upside in BAX stock.

Piper says BAX stock ‘interesting asset’ in Hill-Rom but stays at Neutral

On September 2, 2021, after Baxter (BAX) confirmed the proposed acquisition of Hillrom (HRC) for $10.5B in equity value, or $156 per share, as has “been rumored for a while now,” Piper Sandler analyst Matt O’Brien said he thinks Baxter is getting an “interesting asset” and that its updates today along with the deal announcement “skew incrementally positive.” However, he has some reservations regarding the sizable integration effort that will be needed. He noted that the company’s standalone outlook in conjunction with the deal was mostly in line with how he was modeling the next couple of years. O’Brien remains Neutral rated on BAX stock with an $82 price target.

Leerink Partners buy rating on BAX stock

On September 5, 2021, Leerink Partners gave BAX stock a buy rating. We don’t have any more information on this upgrade.

VIDEO I invested $100,000 in to these 3 stocks

On August 30, 2021, Tyler Pratt gave his opinion on BAX stock among two other stocks:

YouTube player

VIDEO Analyst Upgrades and Downgrades for Friday, 9/3: $BAX, $AVGO, $CLX, $JOAN, $HRC, $BSM, $CCJ

On September 3, 2021, Daily Trade Alert gave their opinion on BAX stock:

28 Analyst Upgrades and Downgrades for Friday, 9/3: $BAX, $AVGO, $CLX, $JOAN, $HRC, $BSM, $CCJ

Baxter to Acquire Hillrom, Expanding Connected Care and Medical Innovation Globally

On September 2, 2021, Baxter International Inc. (NYSE: BAX), a leading global medical products company, and Hillrom (NYSE: HRC), a global medical technology leader, announced that the companies have entered into a definitive agreement under which Baxter has agreed to acquire Hillrom for $156.00 per share in cash for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt.

Hillrom brings a highly complementary product portfolio and innovation pipeline that will enable Baxter to provide a broader array of medical products and services to patients and clinicians across the care continuum and around the world, facilitating the delivery of healthcare that is patient- and customer-centered, and focused on improving clinical outcomes. The combination is also expected to accelerate the companies’ expansion into digital and connected care solutions that increasingly enable patients to access hospital-level care at home or in other care settings.

“Baxter and Hillrom share a common vision for transforming healthcare to better serve all patients and providers,” said José (Joe) E. Almeida, Baxter’s chairman, president, and chief executive officer. “Patients increasingly want to receive their care at home or nearby, while hospitals and other care providers are increasingly using digital health technologies to expand access, improve quality and lower costs. Baxter and Hillrom are uniting to meet the challenges of a rapidly evolving global healthcare landscape while creating significant value for all the stakeholders we serve. We’re very excited to welcome the Hillrom team to Baxter and to join together to advance our mission to save and sustain lives.”

John Groetelaars, Hillrom’s president and chief executive officer, said, “We are proud of the steps we have taken to transform Hillrom into a medical technology leader with an innovative portfolio of connected care solutions. Today’s milestone announcement represents a win-win for all stakeholders. Patients and caregivers will benefit from enhanced capabilities across the continuum of care, our shareholders will receive a significant and immediate premium for their investment, and our employees will benefit from being part of a larger, stronger company with accelerated growth opportunities. Baxter is the ideal partner to enhance our global reach and realize the true potential of our vision to accelerate medical innovation around the world. With our shared patient-centric cultures, we look forward to seamlessly bringing our two companies together.”

Strategic Rationale

The Baxter-Hillrom combination will expand access to Hillrom’s portfolio globally; broaden the presence of the combined companies across sites of care; accelerate and strengthen the combined organization’s digital transformation, and is expected to generate compelling financial returns for Baxter’s shareholders.

Key benefits of the acquisition include:

  • A common vision for transforming healthcare to improve efficiencies and clinical outcomes, drive actionable insights and lead across the care continuum: The complementary product offering of the combined companies will support the patient in the hospital, at home, and in alternate sites of care, allowing better integration and coordination of healthcare delivery.
  • A strengthened portfolio with opportunity to accelerate digitally-enabled connected healthcare and expand penetration of combined solutions worldwide: The companies’ combined capabilities in therapeutic delivery, monitoring, blood purification, diagnostics and communications for patients and caregivers will enhance opportunities for truly connected care that result in better patient outcomes, improved workflow efficiencies and data-driven insights while lowering healthcare costs overall.
  • A robust combined platform for shareholder value creation through meaningful anticipated synergies with a continued commitment to strong cash flow generation: The transaction provides a significant opportunity to build upon Baxter’s established global infrastructure to grow Hillrom’s international business, which currently represents approximately one-third of Hillrom’s total 2020 revenue. It should also meaningfully enhance Baxter’s earnings growth through the realization of substantial cost synergies and potential opportunities to accelerate revenue growth over the longer term.
  • A shared culture that values inclusivity, innovation and corporate responsibility: The combination unites two organizations that have each been recognized for achievements in workplace diversity and corporate responsibility, and for fostering an environment that supports and encourages high performance, respect for individuals, and professional growth.

Transaction Highlights

Upon completing the transaction, Baxter will pay $156.00 in cash for each outstanding share of Hillrom common stock for a purchase price of $10.5 billion. Baxter will also assume Hillrom’s outstanding debt and cash for a total enterprise value of $12.4 billion. The purchase price represents a 26% premium to Hillrom’s closing stock price on July 27, 2021, the last trading day before media reports speculating about a potential transaction.

Baxter expects the combination to result in approximately $250 million of annual pre-tax cost synergies by the end of year three. This estimate excludes any benefit from potential new revenue growth opportunities resulting from combining the two organizations.

The transaction is expected to be low double-digit accretive to Baxter’s adjusted earnings per share (EPS) in the first full year post-close, increasing to more than 20% by year three. The transaction is also expected to expand Baxter’s overall adjusted EBITDA margins over the medium-term and deliver strong cash flow generation with a high single-digit return on invested capital (ROIC) expected by year five.

Baxter will finance the transaction through a combination of cash and fully committed debt financing. At closing, Baxter estimates that it will have net leverage of approximately 4.2x net debt to pro forma1 adjusted EBITDA of the combined companies (as estimated by Baxter management). Baxter is committed to an investment-grade credit rating and deleveraging to 2.75x net leverage within two years of closing.

Approvals and Timing

The Board of Directors of both companies have unanimously approved the acquisition. The transaction is subject to the approval of Hillrom shareholders and the satisfaction of customary closing conditions, including regulatory approvals. The transaction is expected to close by early 2022.

Baxter Long-term Financial Guidance and 2021 Investor Conference Update

As a result of the proposed acquisition, Baxter’s 2021 Investor Conference, originally scheduled for Sept. 20, will be rescheduled to a date following the transaction’s completion. This will allow Baxter to provide an updated strategic and financial outlook inclusive of the combined organizations.

In the interim, Baxter is issuing long-term financial guidance as a standalone entity. Baxter expects sales to grow 4-5%, compounded annually from 2021 to 2024 based on current foreign exchange rates. Over this period, Baxter anticipates expanding its adjusted operating margin by 300 basis points or more. Baxter expects to deliver earnings growth of low double digits compounded annually over the same period on an adjusted basis. This Baxter standalone guidance does not reflect any impact from the proposed acquisition.

Advisors

Perella Weinberg Partners LP is acting as the lead financial advisor to Baxter. J.P. Morgan and Citi also serve as financial advisors to Baxter and have committed to providing fully committed financing. Sullivan & Cromwell LLP is serving as legal advisor to Baxter. Goldman Sachs & Co. LLC is serving as lead financial advisor, and BofA Securities is serving as financial advisor to Hillrom. Wachtell, Lipton, Rosen & Katz is serving as legal advisor to Hillrom.

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