Baxter reported third-quarter results that put it on track to meet our $4.68 adjusted EPS estimate for the year, slightly ahead of management guidance of $4.65-$4.67. We’re maintaining our $80 fair value estimate despite branded hemophilia and generic anesthesia and chemotherapy competition that will likely begin to emerge as headwinds in early 2014.

We think Baxter’s wide economic moat is stable, built by intangible assets surrounding Advate and related hemophilia franchises and cost advantages in the renal and plasma markets, and we remain confident in the long-term competitive advantages of the firm.

The acquisition of Swedish dialysis firm Gambro closed in early September, and including Gambro revenue, Baxter saw 9% top-line growth in the third quarter (6% growth excluding Gambro). In the BioScience segment, Baxter’s 6% growth was boosted by continued uptake of Advate as a prophylaxis treatment and as an every-three-day regimen, and international sales of Advate are beginning to see a benefit from the firm’s exclusive deal in the Brazil market.

BioTherapeutics was actually a drag on the BioScience segment, with 3% global growth; while Baxter has regained Gammagard supply in the U.S., it still needs to re-enter certain international markets that it strategically exited when capacity was constrained last year.

In the Medical Products segment, sales grew 10%, including $100 million in revenue attributed to Gambro (Medical Products growth was 6% excluding Gambro). One of the biggest drivers of this improving Medical Products strength was U.S. Fluid Systems sales, which were boosted by strong sales of IV solutions and pricing power for cyclophosphamide.