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Key Takeaways Baxter lifts 2026 sales growth to 3%-4% and adjusted EPS guidance to $1.95-$2.15.Q2 revenues rose 5% to $2.96B, with Advanced Surgery delivering 12% organic growth.Baxter's margins fell as manufacturing costs, tariffs and higher-cost inventory pressured profits. Baxter International Inc. (BAX - Free Report) raised its 2026 sales and adjusted earnings outlook after second-quarter results exceeded expectations. The update gives investors another data point on the company’s early-stage turnaround as operating execution improves.

The remaining question is whether better demand and cost actions can translate into sustained earnings improvement while margins face manufacturing, tariff and pricing pressure.

BAX Lifts 2026 Sales and Earnings ExpectationsBaxter now expects 2026 reported sales growth of 3% to 4%, up from its prior forecast of flat to 1% growth. Organic sales are projected to increase 2% to 3%, compared with the earlier expectation of approximately flat growth.

Adjusted earnings guidance increased to $1.95-$2.15 per share from $1.85-$2.05. Management tied the stronger organic sales view to year-to-date performance and expected second-half growth, while the higher earnings outlook also incorporates the second-quarter tariff refund benefit.

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Baxter Q2 Results Show Broad-Based Organic GrowthSecond-quarter revenues were $2.96 billion, up 5% on both a reported and organic basis. Adjusted earnings came in at 56 cents per share, ahead of expectations despite declining 5% from the year-ago period.

Medical Products & Therapies generated $2.08 billion in sales and grew 5% organically, while Healthcare Systems & Technologies posted $801 million and 4% organic growth. Advanced Surgery stood out with $331 million in revenues and 12% organic growth, supported by demand for hemostats and sealants.

BAX Margin Compression Tempers the Earnings BeatThe earnings beat did not remove profitability concerns. Adjusted gross margin fell 210 basis points to 38.6%, while adjusted operating margin declined 90 basis points to 14.2%.

Higher-cost inventory produced in late 2025, manufacturing costs and tariffs weighed on profitability. Medical Products & Therapies also saw a lower contribution from pricing. Baxter still expects full-year adjusted operating margin of 13% to 14%, leaving margin recovery dependent on stronger volumes, cost actions and improved inventory flow-through.

Baxter Novum Hold Remains a Key Guidance RiskThe Novum IQ large-volume pump hold remains an execution risk. Lower Infusion Systems sales in the second quarter reflected the ongoing shipment and installation hold, customer returns and transitions to Spectrum, even as demand for Spectrum IQ remained steady.

Baxter has identified corrections and moved into early verification testing while continuing to work with regulators. The 2026 outlook still includes potential customer uncertainty around the hold, so a delayed normalization could continue to constrain Infusion Systems performance.

Becton, Dickinson and Company (BDX - Free Report) also competes in infusion technology through its Alaris system, underscoring the importance of reliable product availability in this market. ICU Medical, Inc. (ICUI - Free Report) sells IV smart pumps and other infusion-therapy products, giving hospital customers another established alternative within the broader infusion landscape.

BAX Ratings Keep the Outlook BalancedBaxter’s raised guidance improves the earnings backdrop, but margin pressure and the unresolved Novum hold keep the turnaround from looking complete. The stock currently carries a Zacks Rank #3 (Hold), a rating consistent with a more balanced near-term setup rather than a clear directional signal. Both, Becton, Dickinson and Company and ICU Medical, also cayry a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BAX has a Value Score of B, Growth Score of B and VGM Score of B, providing favorable supporting characteristics across valuation and growth measures. Its Momentum Score of C is less supportive, reinforcing that stronger guidance by itself does not eliminate near-term execution uncertainty

The market expects Baxter International (BAX - Free Report) to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended June 2026. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 30. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus EstimateThis drug and medical device maker is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of -39%.

Revenues are expected to be $2.79 billion, down 0.6% from the year-ago quarter.

Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 0.53% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Price, Consensus and EPS Surprise

Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Baxter?For Baxter, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -0.99%.

On the other hand, the stock currently carries a Zacks Rank of #4.

So, this combination makes it difficult to conclusively predict that Baxter will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Baxter would post earnings of $0.31 per share when it actually produced earnings of $0.36, delivering a surprise of +16.13%.

Over the last four quarters, the company has beaten consensus EPS estimates two times.

Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Baxter doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Expected Results of an Industry PlayerAnother stock from the Zacks Medical - Products industry, Tilray Brands, Inc. (TLRY - Free Report) , is soon expected to post loss of $0.02 per share for the quarter ended June 2026. This estimate indicates a year-over-year change of -110%. Revenues for the quarter are expected to be $258.13 million, up 15% from the year-ago quarter.

The consensus EPS estimate for Tilray Brands has remained unchanged over the last 30 days. However, a lower Most Accurate Estimate has resulted in an Earnings ESP of -100.00%.

When combined with a Zacks Rank of #3 (Hold), this Earnings ESP makes it difficult to conclusively predict that Tilray Brands will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates two times.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.