(FORTUNE Magazine) – Judging from the recent spate of bad news coming out of Baxter International (BAX, $23), the medical-products giant would seem to be in need of one of its many life-saving therapies. Most recently, the company stunned investors in March when it gave a dire prognosis for its 2003 earnings. Since last April, Baxter's stock has tumbled more than 60%.

But buying by some of the fund industry's top value managers, including Legg Mason's Bill Miller and Oakmark's Bill Nygren, indicates that they believe Baxter isn't nearly as sick as it may seem. Oakmark research analyst Judson Brooks argues that Baxter is being punished too severely for what's likely to prove a short-term stumble. Several new products are soon expected to boost growth. The most promising is Advate, a next-generation blood-clotting drug for hemophiliacs, which is expected to be approved in the U.S. later this year and is a potential blockbuster.

At its current price, Baxter's stock appears to have limited downside. Shares are selling for just 12 times analysts' 2003 earnings estimate, far lower than their historical P/E range of 19 to 30, according to Argus Research analyst John Eade. He calculates the stock is worth more than $50 a share. That could mean healthy profits for investors who buy in now. --David Stires