UPDATE: Morgan Stanley Raises PT on Baxter International from $58 to $63

Morgan Stanley has published a report on Baxter International BAX raising the price target from $58.00 to $63.00. In the report, Morgan Stanley wrote, "Another strong quarter with improving margins and EPS growth increases visibility on upside to 2H11 and 2012 estimates. Baxter's guidance assumes a 400 bps deceleration in EPS growth to 6% in 2H11 from 10% in 1H11. However, our analysis of inorganic headwinds and tailwinds through 2011 (detailed inside) suggests several margin drivers will improve through the year, implying this sequential deceleration may prove conservative. Several dynamics drive our confidence in the 2012 outlook. Key 2011 financial headwinds (pharma tax, plasma price reductions and negative manufacturing variances, pension expense) will turn into tailwinds in 2012 ($0.05-0.07 in Castlebar costs and better plasma manufacturing). Pipeline momentum is building, as Baxter recently submitted its HyQ BLA and expects to begin both its second PIII IVIG trial in Alzheimer's and its home hemodialysis trial before year end. As investor focus turns to the 2012 outlook through the back half of 2011, consensus may develop a better appreciation of the growth implications of potential share gains and favorable mix in IVIG following the HyQ launch. This should reflect in the multiple. We expect EPS growth to accelerate from 7.5% in 2011 to 10.0% in 2012, though we see upside to our forecasts in both years." Morgan Stanley rated Baxter International an Overweight with a price target of $63.00. Baxter International closed Thursday at $62.41.