Baxter has emerged as a focused, de-levered medical technology company trading at a low valuation, after a year of aggressive restructuring which included divesting its kidney care business, slashing the dividend, and installing new leadership. Baxter’s product portfolio is mission-critical: IV solutions, infusion pumps, injectable pharmaceuticals, surgical sealants, and hospital monitoring systems that cover 350 million patients annually.
These are not discretionary products but instead essential consumables that hospitals must purchase regardless of economic conditions. That ensures highly predictable recurring revenue streams, and such a competitive moat around supply reliability cannot be easily replicated.
The financial case for accumulation at current levels is straightforward: the shares trade at a forward P/E of just 8.4 times 2026 consensus earnings. With divestiture proceeds applied to debt reduction and $300 million in annual cash flow freed from the dividend cut, this firm is on track to reach its leverage targets. Once this deleveraging is complete, management will have significant flexibility to resume capital returns, pursue strategic M&A, or reinvest in high-return organic growth initiatives.
BAXTER INTERNATIONAL INC. (New York symbol BAX; www.baxter.com) makes specialized equipment for hospitals, including intensive-care-unit beds, operating tables, patient monitoring equipment and electronic diagnostic systems.
Baxter has narrowed its focus in the past few years.
That includes the sale in September 2023 of its BioPharma division for $4.25 billion (or $3.4 billion after taxes), That unit’s products and services helped drugmakers manufacture their products.
More recently, in January 2025, Baxter completed the sale of its Renal Care and Acute Therapies unit to investment firm Carlyle Group Inc. (New York symbol CG) for $3.4 billion (after-tax).
[ofie_ad]
The company originally planned to hand out shares in Vantive to its own shareholders, but it ultimately opted for the sale instead.
Baxter’s dividend cut will help address the company’s high debt load
In the three months ended September 30, 2025, Baxter’s revenue rose 5.0%, to $2.84 billion from $2.70 billion a year earlier. Thanks to improving supply chains and cost cutting, earnings before one-time items improved 40.8%, to $0.69 a share (or a total of $353 million) from $0.49 a share (or $252 million) a year earlier.
In November 2025, Baxter announced it would cut its quarterly dividend from $0.17 to $0.01 per share starting with the January 2026 payment. This 94.1% cut frees up over $300 million annually to accelerate debt payments and strengthen the balance sheet. The stock now yields 0.2%.
Baxter’s long-term debt of $8.7 billion (as of September 30, 2025); that amount is equal to a high 87% of the company’s market cap.
Baxter’s shares are down over 33% since the start of 2025. That’s partly due to a recall of its Novum infusion pumps over a problem that could lead to an incorrect dosage.
Suspending Novum shipments will likely limit the company’s 2025 revenue growth to just 1% to 2%. Moreover, it faces several class-action lawsuits that will probably weigh on the stock for the next few months.
Baxter will probably earn $2.30 a share for all of 2026, and the stock trades at a just 8.4 times that estimate. That’s a low p/e in light of the company’s high market share and steady research spending (5% of revenue).
Recommendation in Wall Street Stock Forecaster: Baxter International Inc. is now a hold.
