Will Baxter Stock Recover To Its Pre-Inflation Shock Highs?

Baxter stock (NYSE: BAX) currently trades at $41 per share, more than 50% lower than the level seen in March 2021, and it can see higher levels over time. BAX stock was trading at around $64 in early June 2022, just before the Fed started increasing rates, and is now 35% below that level, compared to 15% gains for the S&P 500 during this period. This underperformance of Baxter stock can be attributed to its tepid sales growth of 1% in H1’23, and growth is expected to remain tepid in the near term. Although there has been a steady decline in the inflation rate in response to the Fed’s aggressive rate hike plan, investors still have concerns about a potential recession.

We note that BAX stock has had a Sharpe Ratio of -0.1 since early 2017, which is far worse than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.