Largely Baxter operates in two distinct areas the first of which is medical devices and instruments.
"That's everything from pre-filled syringes, to intravenous delivery systems, IV nutrition products, infusion pumps, anesthetics, to kidney dialysis systems," Cramer said.
The second area is biosciences.
"It develops and sells treatments for hemophilia and other bleeding disorders, along with immune deficiencies, burns and shock, as well as making some vaccines," Cramer added.
Now history suggests to Cramer that these different types of businesses don't always thrive under the same roof.
"As we've seen from Abbott Labs and Covidien, when you take a company like this and break it up into a medical products business and a drug business, it creates a tremendous amount of value. I see no reason why Baxter should be any different," Cramer said.
The Mad Money host rolled up his sleeves and crunched the numbers. Here's what he came up with.
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"Looking at the biosciences division—the drug side of the business—high-fliers in this space trade at 21 times earnings," Cramer said. "But let's be conservative and say Baxter's bioscience business only deserves to trade at 19 times earnings. That translates into a $55.86 stock."
Meanwhile Cramer thinks the medical products division, with a 15% growth rate, should command a premium of 17 times earnings. "That translates into a $31.28 stock," he said.
"Add them together, and the sum of Baxter's parts could be worth $87 a share, or 19.5% higher than where it is right now," he concluded.
And Cramer added that's simply with the stroke of a pen. "It doesn't factor in all the improvements that could be made by splitting up the company and letting each business focus on what it does best," he explained.
If you're thinking a possible break-up is completely pie in the sky, Cramer suggests you think again.
"Baxter has already taken a step in that direction. Last July the company officially restructured itself into two segments, the biosciences division and the medical products division, making it much easier to organize and implement a potential breakup," Cramer said.
And he added that he's not the only one advocating this kind of a move.
"Earlier this week, Morgan Stanley put out a great piece of research where they recommended that Baxter split itself up along the lines I'm suggesting," he said. "Therefore I think it's safe to say management has at least heard the idea from another source."
