Baxter International Inc. (BAX): A Bull Case Theory

We came across a bullish thesis on Baxter International Inc. on Value investing subreddit by Mr-Gambini. In this article, we will summarize the bulls’ thesis on BAX. Baxter International Inc.'s share was trading at $19.29 as of December 17th. BAX’s forward P/E was 8.12 according to Yahoo Finance.

Baxter International (BAX) is a quintessential “boring but essential” medtech company operating in oligopolistic markets for IV solutions, infusion pumps, patient monitoring, and hospital equipment, where demand is non-discretionary and customer relationships are deeply entrenched. The stock has been driven to multi-decade lows near $19 following a series of setbacks, but the recent selloff reflects peak capitulation rather than structural deterioration.

Under new CEO Andrew Hider, Baxter delivered a textbook “kitchen sink” quarter in Q3, resetting expectations aggressively by cutting guidance, slashing the dividend to preserve over $300 million in annual cash for deleveraging, and acknowledging slower-than-expected recoveries in IV fluids and the paused Novum IQ infusion pump. While reported sales missed lowered expectations and full-year growth was revised to 1–2%, margins continued to improve, free cash flow turned positive, and operating discipline intensified, with SG&A reductions and operating margins expanding meaningfully year over year.

Importantly, the issues weighing on sentiment are temporary and fixable: the Novum IQ pump had been gaining market share rapidly before its voluntary hold, legacy alternatives are ramping well, and IV fluid production is fully restored even as hospital normalization lags, a pattern consistent with past disruptions. Capital spending demand from hospitals remains strong, tariffs are manageable, and deleveraging is firmly on track.

With Hider bringing Danaher-style operational rigor and a proven turnaround track record, Baxter is positioning itself as a self-help story heading into a 2026 investor reset. At roughly 9–10x forward earnings amid washed-out healthcare sentiment, the stock offers an asymmetric risk-reward, where temporary noise is being mispriced as permanent impairment.

Previously we covered a bullish thesis on Medtronic plc (MDT) by Magnus Ofstad in May 2025, which highlighted the company’s strategic transformation, activist involvement, and value unlocking through divestitures and innovation. The company's stock price has appreciated approximately by 21.83% since our coverage. This is because the thesis played out partially. The thesis still stands as execution remains ongoing. Mr-Gambini shares a similar thesis but emphasizes on self-help turnaround and balance sheet repair.

Baxter International Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held BAX at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the potential of BAX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.