BAX engages in the worldwide development, manfacture and distribution of products, systems and services used primarily in the health-care field. For the FY ended 12/31/00, revenues rose 8% to $6.90B. Net income from cont.ops. before acct. change fell 5% to $738M. Revenues reflect growth in the company%s I.V. Systems/Medical products and Renal segments. Net income was partially offset by the addition of in-process R&D and acquisition costs.

March 1, 2001

Baxter International (BAX) has more to offer than meets the casual eye. Currently, the company is trying to become a biotech powerhouse. BAX plans on accomplishing this ambitious effort through peeling off its slow growing businesses and investing heavily in R&D. So far, the gamble is paying off. The company’s bioscience sales have more than tripled over the last few years to $2.5 billion. We also like the stock because the company's Board of Directors announced a 2:1 split of the stock, subject to a shareholder approved increase in the number of common shares the company is authorized to issue. Assuming the approval is received, the record date will be on May 9th 2001. On Thursday, BAX added $0.52 and came within $0.55 of hitting a new all time high. Looking at chart, we can’t help but notice the excellent set-up for a momentum breakout. However, we’ll look for resistance to come at the all time high of $93.16 and then at the $95 mark. Support comes in at the $91 mark, bolstered by the 5-dma of $91.10. Traders considering a position in BAX should look to time their entries when the stock breaches above resistance or recoils from support on strong volume of 900,000 shares traded by noon. We will set our stop at $89 to limit our downside risk.

Picked on March 1st @ $92.61
Change since picked 0.00
Stop Loss @ $89.00

March 8, 2001

Baxter revealed plans yesterday to build a new $170 million facility for making vaccines and said earnings will grow in the mid-teens in 2001. The company expects earnings growth to reach high-single digits in the first half of 2001, while an increase to the mid to high-teens should unfold in the second half of the year. Despite the positive comments from the company, BAX shares unexpectedly ran into some post-announcement selling on Wednesday. A pullback in the AMEX Biotechnology Index (BTK) didn’t help matter either, as the stock lost 4.09 points or 4% to close at $90.34. BAX logged volume of 2,639,100, which handily surpassed the three-month average. With that said, we were looking for BAX to rebound in today’s session. Luckily, this scenario unfolded. After bouncing off an intraday low of $89.35, the stock recovered to a close of $$92.72, up 2.63% on the day. Should this recovery continue, we’ll look for resistance to occur at the 5-dma of $93.20, followed by a tougher challenge at $95. Support will come at $90, with additional support at the 30-dma of $89.49. Look to time entries when BAX shares bounce off of support or break above $95 on volume of at least 900,000 by midday.

Picked on March 1st @ $92.61
Change since picked +0.11
Stop Loss @ $89.00

March 6, 2001

Baxter’s big gamble in biosciences is giving investors more bang for the buck. The firm recently reported fourth quarter earnings per share growth of 15%, in-line with expectations. In addition, sales growth was strong across all divisions and is accelerating. The company has now recorded eight straight quarters of good results and the outlook continues to be positive. What’s more, it looks like momentum players are starting to jump back on the bandwagon. Looking at the chart, we’re pleased with the early week success of BAX shares, which broke sharply through resistance on Monday with a strong advance of 4.09 points! The stock normally trades around 1,949,590 shares based on a three-month average, but Monday’s breakout came on volume of only 1,511,000 shares. This is of some concern to us, so what we’d like to see now is for volume to build as the stock attempts to make further highs later in the week. With that said, we’ll look for initial resistance to come at the $95 mark, bolstered by the all time high of $95.20. Look for a much swifter barrier to follow at the century mark, which may be a good level to lock in gains. Support will come at the February 21st intra-day high of $93.16, with additional support at the 20-dma of $90.04. Look to time entries when BAX shares bounce off of support or break above $95 on volume of at least 900,000 shares by noon. We plan to place stops at $98.50 to limit potential losses.

Picked on March 1st @ $92.61
Change since picked +1.82
Stop Loss @ $89.00

March 4, 2001

The mapping of the human genome was a giant leap forward for the biotech industry. Using a DNA recipe to successfully cure a disease, however, is proving to be a great deal more challenging. In spite of this, Baxter is finding out that its also a great deal more rewarding. The company’s genetic therapies for life-threatening diseases are due to improve earnings by 20% annually and expand gross profits margins to 60%. This is in stark contrast to the company’s 5% earnings growth it has achieved as a medical supply business. As for our play, BAX shares kept climbing on Friday and set a new all time high of $93.48. The leg up came on fairly good volume of 1,537,400 shares traded and leads us to believe that there are still plenty of buyers to lift the stock higher. A positive MACD and higher highs in the OBV indicator have also helped to confirm the potential for more gains. So, with that said, we’ll expect to see the next key level of resistance to appear at the $95 mark. Look for a potentially harder barrier to come at the century mark, which can often times mark the peak of a rally. Consider using a trailing stop strategy, should the stock bounce sharply from either of these levels. Support is at the 5-dma of $91.89 and then at the 10-dma of $90.70. We’ll look for potential entry points to occur when BAX rallies through resistance or bounces from support on good midday volume of at least 900,000 shares. Our stop of $89 will provide us with downside protection.

Picked on March 1st @ $92.61
Change since picked +0.72
Stop Loss @ $89.00