Transcript uoinvestmentgroup.org

Baxter
International Inc.
Sadia Ritu
Global
Diversified
History
 Founded by Dr. Don Baxter in 1931
 First manufacture of commercially prepared IV solutions
 Bought out by Dr. Ralph Falk in 1935 and development of
a research division
 Headquarter in Deerfield Illinois
 1939 ‘Transfuso-Vac container’, the first sterile, vacuumtype blood collection and storage unit.
2011 Sales by Business
BioScience
 Recombinant (36%)
 Antibody Therapy (26%),
 Plasma Proteins (23%),
 Regenerative Medicine (11%)
 others (4%).
Medical Products
 Renal (32%)
 Global Injectable (26%),
 IV Therapy (24%),
 Infusion System (10%),
 Anesthesia (7%)
 Others (1%)
Sales and distribution
 Supplier Relations
 Operations
 Research and Development
2011 Sales by Region
Regional Growth:
 North America
 Europe, Middle East & Africa
 Latin America & Canada
 Asia Pacific
Acquisitions
Industry
 Medical Instruments and Supplies Industry
-106.6 billion
-5.8% growth rate
 Healthcare sector
 In the U.S., people over the age of 65 is
expected to be about 49.7 million over the
next 5 years.
The economic effect
 Healthcare Reform
 Tax increase in 2013
 Management & Employees
 Baxter’s management guidance
Portfolio History
Svigals Portfolio:
45 shares currently
($50.13/ share)
31.28% unrealized gain
Tall Firs Portfolio:
340 BAX shares
purchased in 2003-04 ($27-28/
share)
about 120% unrealized gain
Downside
 FDA and EMA risk of approval.
 Suppliers
 Upcoming tax increase of 2013 on medical device
companies.
 Product quality or patient safety issues, leading to
product recalls or withdrawals.
 Fluctuations in foreign exchange and interest rates.
Recent Happenings:
 Baxter Said to Near Deal to Buy Gambro for $4
Billion -Nov 24, 2012
 Baxter Declares Quarterly Dividend –Nov 13, 2012
Dividends
BDX
43%
MDT
5%
COV
22%
FMS
30%
Discounted Cash Flow
Analysis
 -Beta
Beta
SD
Weighting
3 year Daily
0.76
20.00%
5 year weekly
0.54
13.00%
1 year daily
0.81
18.00%
5 year monthly
0.49
5.00%
Vasicek 3 year daily
0.79
24.00%
Hamada 3 year daily
0.80
20.00%
Baxter International Inc. Beta
0.74
-Revenue Model
-Cost Of Goods Sold
-SG&A
-Cap Ex
-Tax Rate
Weights:
DCF-70%
Comp-30%
Implied Price:
$70.94
Questions?
Recommendation
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Long term growth
80 years long Healthcare leader
Global expansions
Diverse
Hold