Baxter International Inc. (BAX, Financial)
Baxter is a provider of medical devices and health care supplies used in patient care. The company’s competitive advantages include leading scale, a large installed base and long-term customer relationships. Demand for Baxter’s products tends to be stable and predictable. We had invested in Baxter a few years ago when Joe Almeida joined the company as CEO, and we believe that he and his management team are focused on growing per share value. Recently, we got another chance to buy shares after the price fell significantly due to margin pressure from inflation, semiconductor shortages and ripple effects related to Covid-19. We see these issues as short term in nature and think that management will restore higher margins in the years ahead. As a result, we believe the stock is cheap at less than 10x our estimate of normalized earnings.
From Bill Nygren (Trades, Portfolio)'s Oakmark Fund second-quarter 2023 commentary.
