BAX
Baxter International Inc.
$22.64
Stable Earnings Power
40%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 39.3% below fair value
You pay
$22.64
Bear
$29.86
Fair
$37.32
Bull
$44.78
Bear
$29.86
+31.8%
$2.96 × 12x P/E
Fair
$37.32
+64.8%
$2.96 × 15x P/E
Bull
$44.78
+97.7%
$2.96 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
7.7x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $20.86 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $37.32 per share.
Warnings
Wall Street's average price target is $20.86 (from 36 analysts). Our estimate is 113% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples