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Baxter Case Write Up

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Submitted By awade583
Words 1235
Pages 5
Mr. Joe C Client

RE: Baxter International Inc. Recommendation Executive Summary

Dear Mr. Client,
Baxter International is a stable company showing consistent growth over the last 5 years and I believe that the company will continue to grow at a similar rate. Their products are not easily matched by competitors and demand for them will continue as they are related to critical health care functions.
Baxter’s cost risk relative to the market is low. This is reflected in a low beta and therefore cost of equity. The intrinsic value of their stock is far higher than where it is trading and is worth heavy consideration to be bought.

Alex Wade
Analyst
Awade583@gmail.com

Mr. Joe C Client

RE: Baxter International Inc

Dear Mr. Client,
As requested, I have completed an analysis of Baxter International. As of market close on April 25th, 2014 Baxter International (BAX) stock was trading for $72.32 per share, with market capitalization of $40.54B. I have performed an analysis of the companies last 5 years of financial statements as well as a forecast of the next 10 years of cash flows to value you the company for you. My analysis concludes that the company is drastically undervalued and presents a terrific buying opportunity. Baxter manufactures products for people with “hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions” (Baxter International Inc, 2013). I believe demand will remain constant for these products, and anticipate steady growth of revenues.
First, I’d like to address some of the key assumptions I made in preparing this analysis for you. The last 5 years of financials shows remarkably constant growth of about 4% in revenue, along with stable Cost of Goods and Selling, General & Administrative Expenses (which contains Research and Development) at about 44% and

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