Cost-cutting is set to boost their earnings

Article Excerpt

These two makers of medical devices face several challenges in 2019. They include higher costs for certain raw materials and tariffs on goods they sell in China. However, their current cost-savings plans should continue to expand their earnings. BAXTER INTERNATIONAL INC. $70 (New York symbol BAX; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 532.1 million; Market cap: $37.2 billion; Price-to-sales ratio: 3.4; Dividend yield: 1.1%; TSINetwork Rating: Average; www.baxter.com) makes a variety of medical devices, including intravenous pumps and kidney-dialysis equipment. The company gets about half of its revenue from outside of the U.S. Due to the rising U.S. dollar, it now expects its revenue will rise 6%. That’s down from its earlier prediction of 7% to 8% growth. However, Baxter continues to benefit from a multi-year restructuring plan it began in 2015. The plan mainly involves cutting jobs and closing some facilities. It should cut $950 million from the company’s annual expenses and should be completed by the end of 2020. Despite the…

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