Morgan Stanley analyst Patrick Wood downgraded Baxter to Underweight from Equal Weight with a price target of $30, down from $39. The company has had a tough time since the acquisition of Hillrom, and while “it may feel harsh to downgrade the stock given it’s at levels not seen since 2012, we do struggle with the setup,” the analyst tells investors in a research note. The firm worries that Baxter’s medium-term Street expectations of margins getting back to 2019 levels of 17%-18% are ambitious given the different business composition and cost environment. It cites a more conservative view on the company’s margins for the downgrade.
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