Baxter International Inc. Baxter (BAX) reported better-than-expected first-quarter earnings on Thursday and reaffirmed its fiscal 2026 guidance, but the headline number masked a sharp 35% drop in profit as tariffs and rising manufacturing costs took a bite.

Earnings Beat, But Profit Declines On Cost Pressures

The hospital care product maker reported first-quarter adjusted earnings of 36 cents per share, beating the consensus of 31 cents. But earnings fell 35% due to an unfavorable comparison to the prior year, which had benefited from a timing shift in expense recognition that reclassified certain functional costs from SG&A to cost of sales. On top of that, higher costs related to tariffs and higher manufacturing costs, including lower absorption, weighed on results.

Sales of $2.7 billion beat the Wall Street estimate of $2.62 billion, increasing 3% on a reported basis but declining 1% on an organic basis.

Segment Performance Mixed Across Portfolio

Medical Products & Therapies sales were approximately $1.3 billion, up 2% on a reported basis but down 2% organically. The segment was hurt by weaker sales in Infusion Therapies & Technologies, mainly due to reduced infusion pump volumes tied to the previously disclosed shipment and installation hold on the Novum IQ LVP. Results also faced a tough year-over-year comparison, as the prior period benefited from a one-time distributor build following Hurricane Helene. Strength in global demand for Advanced Surgery products partially offset the decline.

Healthcare Systems & Technologies sales were $705 million, flat on a reported basis and down 2% organically. Performance reflected reduced sales within the Front Line Care division, driven by the timing of orders and the impact of planned global portfolio exits. Sales in the Care & Connectivity Solutions division were approximately flat.

Pharmaceutical sales reached $621 million, up 7% on a reported basis and 1% organically. The quarter reflected continued strength in Drug Compounding, partially offset by reduced sales within Injectables & Anesthesia.

Guidance Reaffirmed Despite Operational Challenges

Baxter reiterated its fiscal 2026 adjusted earnings guidance of $1.85-$2.05 per share, compared to the consensus of $1.91. The company also reaffirmed its annual sales guidance of $11.24 billion-$11.36 billion, versus the consensus of $11.35 billion.

BAX Technical Outlook: Key Levels And Momentum

Baxter is currently trading within a challenging technical setup, positioned 6.7% below its 100-day simple moving average (SMA) and 2.4% below its 50-day SMA, indicating a bearish trend in the intermediate term. The stock is also trading 0.1% below its 20-day SMA, suggesting short-term weakness as it struggles to maintain upward momentum.

The relative strength index (RSI) is at 39.97, indicating neutral momentum and suggesting that the stock is neither overbought nor oversold at this time. This positioning implies a potential for further price movement as traders assess the stock's next direction.

• Key Resistance: $19.00 — A level where selling pressure may increase.
• Key Support: $15.50 — A critical level that could attract buying interest.

Baxter's 12-month performance shows a decline of 43.09%, reflecting significant challenges over the past year.

BAX Price Action: Baxter International shares were down 0.80% at $17.44 during premarket trading on Friday.

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