UPDATE 4-Baxter posts higher 3rd-qtr net, raises outlook

Thu Oct 21, 2010 11:40am EDT

* Q3 EPS $1.01 vs 97 cents expected by Wall Street

* Sales up 3 pct; raises lower end of full-year outlook

* Shares rise almost 4 pct to six-month high (Adds conference call, analyst comment, trading activity, byline)

By Debra Sherman

CHICAGO, Oct 21 (Reuters) - Baxter International Inc (BAX.N) reported higher quarterly earnings, beating Wall Street estimates, as demand improved for its plasma proteins and antibody therapy, and expenses declined.

The maker of blood therapy products, medication infusion pumps and products used for kidney dialysis also raised its 2010 sales outlook and the lower end of its earnings forecast, saying the market for plasma proteins and antibody therapy, known as IVIG, -- part of its core Bioscience business -- has begun to stabilize .

"After a challenging start to the year, it looks like they're back on track with the market stabilizing," said Leerink Swann analyst Rick Wise, noting that this latest quarter represents the strongest growth quarter for both IVIG and plasma since the fourth quarter of 2009.

During a conference call, Chief Executive Bob Parkinson told analysts that Baxter had given up little market share and has finalized contracts through 2011 with most of its large hospital accounts for Gammagard liquid, an antibody therapy used to treat immunodeficiency disorders.

In the third quarter, net earnings rose to $594 million, or $1.01 per share, from $532 million, or 87 cents per share, in the same 2009 quarter.

Analysts on average expected 97 cents per share, according to Thomson Reuters I/B/E/S.

The company has purchased some 26.3 million shares year to date so a lower share count was used to calculate earnings per share for the past quarter.

Worldwide sales rose 3 percent to $3.2 billion, with sales at its medication delivery business rising 7 percent and sales at its bioscience and renal units each rising 3 percent.

Total U.S. sales rose 4 percent to $1.4 billion, while international sales rose 1 percent to $1.8 billion. Excluding the impact of foreign currency, international sales rose 4 percent.

"Bioscience did better than what we thought they could do and you can see expense control through the income statement," said Avondale Partners analyst Daniel Owczarski.

Baxter expects 2010 sales to rise 2 percent to 3 percent, excluding the impact of foreign exchange, and earnings of $3.96 to $3.98 per share, before special items.

Last quarter, the company had forecast sales growth of 1 percent to 3 percent, excluding foreign currency and adjustments, and earnings of $3.93 to $3.98 per share, before items.

"This new guidance range is likely conservative, with Baxter's CEO emphatically stating in the first quarter that he did not intend to have to lower guidance again. And this new guidance would suggest that current 2010 Street estimates ... are too low," Wise said.

Baxter shares were up $1.96, or 3.9 percent, at $51.35 in late morning trading on the New York Stock Exchange. (Reporting by Debra Sherman; Editing by Steve Orlofsky and Derek Caney)

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