Is BAX a good stock to buy? We came across a bullish thesis on Baxter International Inc. on Heavy Moat Investments’s Substack. In this article, we will summarize the bulls’ thesis on BAX. Baxter International Inc.’s share was trading at $20.03 as of June 9th. BAX’s forward P/E was 10.20 according to Yahoo Finance.
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Baxter International (BAX) is a century-old healthcare company operating in essential hospital-facing markets, yet its equity story has been defined by a severe 80% share price collapse over the past four years, bringing valuation levels back to those seen two decades ago. Despite operating in structurally attractive healthcare end markets, the company’s long-term performance has been hampered by stagnant top-line growth, with revenue rising only marginally from $10.36 billion in 2006 to $11.24 billion today, while inflation-adjusted terms imply real contraction in scale and weaker earnings power than historical levels.
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This stagnation reflects a long period of aggressive, and often inconsistent, capital allocation characterized by repeated acquisitions followed by divestitures and spin-offs, leaving Baxter as a continually reshaped platform rather than a focused operator. This M&A-driven strategy also resulted in a volatile employee base and a heavy debt load that peaked at $18 billion in 2021, though it has since been reduced to $9.8 billion through asset sales, improving balance sheet flexibility.
The company’s history includes multiple operational and compliance setbacks spanning product recalls, contamination incidents, regulatory issues, and litigation risks, all of which have weighed heavily on investor confidence and multiple compression. However, following recent restructuring, Baxter now operates through three more focused segments: Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals, each anchored in non-discretionary hospital demand with stable, recurring revenue characteristics.
The Healthcare Systems & Technologies segment, in particular, stands out with ~50% gross margins and mid-to-high single-digit growth potential driven by hospital digitization trends. With a leaner structure, improving leverage profile, and exposure to essential healthcare demand, Baxter presents a classic turnaround opportunity where operational discipline, if enforced under stronger management, could unlock meaningful margin expansion and re-rating potential, positioning the company for a sustained recovery leading to attractive upside.
Previously, we covered a bullish thesis on Medtronic plc (MDT) by Investing Intel’s Substack in May 2025, which highlighted robust FY2025 performance, broad-based segment growth and the planned diabetes spin-off to streamline operations and unlock value. MDT’s stock price has appreciated by approximately 1.61% since our coverage. Heavy Moat Investments’s Substack shares similar view emphasizing Baxter turnaround drivers.
Baxter International Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held BAX at the end of the first quarter which was 42 in the previous quarter. While we acknowledge the risk and potential of BAX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BAX and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
