NEW YORK (AP) — A Morgan Keegan analyst upgraded shares of specialty drug and medical device maker Baxter International Inc. Thursday, saying sales of a blood product will be stronger than Wall Street expects.
Lawrence Keusch said Baxter has a strong presence in the market for intravenous immunoglobulin, or IVIG, a blood product used to treat immune disorder and infections. He said total IVIG revenue will grow in 2010, despite investor concerns related to the economy. He expects demand for the product will grow at about 5 to 8 percent per year for the next few years, and if the economy improves and employment increases it could grow closer to 10 percent.
“We do not see IVIG sales growth going negative in 2010 as many investors fear,” the analyst wrote, citing results of a Morgan Keegan survey of plasma collection centers.
Keusch upgraded shares of the Deerfield, Ill., company, to “Outperform” from “Market Perform,” and raised his target price to $69 from $62. That is about 14 percent above the stock’s Wednesday closing price of $60.37. Baxter shares have traded between $45.46 and $60.99 over the past 12 months, and last reached $69 in September 2008.
In morning trading shares advanced 87 cents to $61.24 and set a new year high of $61.32.
The analyst wrote that Baxter’s profit should grow around 11 to 13 percent in 2010, which he said is strong compared with other large health care companies. He took a positive view of Baxter’s research and development pipeline, and added that customers will spend more money on equipment in 2010 and 2011 than they have in the last few years, which will give Baxter more cash.