UPDATE: Morgan Stanley Reiterates Baxter International at Overweight Despite Deal Concerns
Morgan Stanley maintained its Overweight rating on Baxter International (NYSE: BAX) despite having concerns over the company's latest Gambro acquisition.
Morgan Stanley noted, "Gambro is a good business long-term with positive secular drivers, but near-term bundling and reimbursement pressures are challenging. Recent growth has not been robust and appears to be in the low single digits. It is not clear whether this represents soft end-market fundamentals, a focus on cash flow over growth, or product positioning. Whether Baxter's global scale and investment could accelerate growth is unclear. If media reports are correct, at $4 billion, this transaction is much larger deal than management's previously discussed target size of <$500 million. That said, management's prior comments may have been targeted at higher-risk technology bets, and Gambro is a more mature asset. Even so, this is the largest deal in Baxter's history, and all transactions carry risk."
Baxter International closed at $68.81 on Friday.
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|Aug 2015||Credit Suisse||Assumes||Neutral|
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