Artisan Mid Cap Value Fund's Views on Baxter International (BAX)

Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund’s Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX posted a return of 0.98%, and Institutional Class fund APHQX returned 0.97%, compared to a 6.18% return for the Russell Midcap Value Index. Equity markets continued their rally in the third quarter as investors overlooked tariff concerns, driven by strong corporate earnings, rising AI capital expenditures, and hopes for economic support from US fiscal policy and lower interest rates. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Artisan Mid Cap Value Fund highlighted stocks such as Baxter International Inc. (NYSE:BAX). Baxter International Inc. (NYSE:BAX) is a healthcare company that offers a portfolio of healthcare products. The one-month return for Baxter International Inc. (NYSE:BAX) was 7.38%, and its shares lost 34.25% over the last 52 weeks. On January 2, 2026, Baxter International Inc. (NYSE:BAX) stock closed at $19.50 per share, with a market capitalization of $10.024 billion.

Artisan Mid Cap Value Fund stated the following regarding Baxter International Inc. (NYSE:BAX) in its third quarter 2025 investor letter:

"In Q3, the portfolio’s stock selection was broadly negative across sectors, reflective of the broader performance headwinds discussed earlier, but our biggest source of underperformance was the health care sector, which had three of our four biggest detractors. These included Centene, Align Technology and Baxter International Inc. (NYSE:BAX). Health care has been one of the worst-performing sectors over the past year as policy uncertainty has caused it to be shunned. Baxter is a health care company that provides essential products in renal care, medication delivery, advanced surgery, clinical nutrition, pharma and acute therapies. Shares have languished in the post COVID years as growth has disappointed due to a combination of factors, including supply-chain issues and a delayed normalization of procedure volumes. Baxter recently completed a multiyear restructuring effort, selling several non-core operations, seeking to transform itself into a more profitable growth company. After a few bumpy years of misstep after misstep and due to moving parts related to its restructuring that has likely added confusion among investors, the stock’s valuation has become increasingly attractive based on our sum-of-parts analysis. A new CEO was appointed in July, but new management’s game plan has yet to be communicated, so there is currently an information deficit, which may be contributing to the stock weakness. Though growth has disappointed, all the company’s earnings are turned into free cash flow because it’s a low capital-intensive business. Baxter is using that free cash flow to pay down debt and return capital to shareholders. The stock now trades at a single-digit multiple on forward earnings, near its cheapest levels ever."

Baxter International Inc. (NYSE:BAX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 38 hedge fund portfolios held Baxter International Inc. (NYSE:BAX) at the end of the third quarter, up from 31 in the previous quarter. While we acknowledge the potential of Baxter International Inc. (NYSE: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.

In another article, we covered Baxter International Inc. (NYSE:BAX) and shared the list of cheap stocks under $20 to buy. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.