Philips’ share-price revival is only half finished
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to fix typos in third and sixth paragraphs.
By Karen Kwok
LONDON, July 29 (Reuters Breakingviews) -Roy Jakobs’s job is only half done. The CEO of Dutch medical group Koninklijke Philips PHG.AS has managed to get the order book growing again, but the company’s share price is still trading well below its 2021 peak, before a recall of faulty sleep aids that tanked the stock. Jakobs may be able to give Philips an extra breath of life by selling off the consumer division.
Philips’ shares showed signs of life on Monday after some encouraging second-quarter results. Comparable order intake, which is the 25 billion euro company’s key measure of expected future revenue, grew 9%. It was the first time in about two years that the number was meaningfully positive. Jakobs’s cost-cutting programme, meanwhile, is working. Its operating margin, which Philips adjusts to exclude amortisation, was 11.1% compared with analysts’ expectations of 9.8%. The shares rose by a tenth.
It’s just the latest win for Philips, which surprised investors in April by settling some sleep-device legal claims for $1.1 billion, which was less than some shareholders feared. A 15% stake purchase last August by Exor, the investment vehicle of Italy’s Agnelli family, also arguably helped restore confidence.
Still, Philips is miles behind where it could have been absent the sleep-apnoea problems. Even after Monday’s pop, its shares are down 44% since their peak on April 9, 2021 – shortly before the troubles started. Closest peer Siemens Healthineers SHLG.DE, which also makes medical equipment like MRI machines, is up 14% over the same period.
Clearing house could help. The 133-year-old conglomerate has slimmed down considerably in recent decades, spinning off businesses including chip giants ASML ASML.AS and NXP Semiconductors NXPI.O, as well as lighting specialist Signify LIGHT.AS. But there’s still a sum-of-the-parts discount on the shares.
Its diagnosis and treatment business alone, for example, will generate 1.3 billion euros of EBITDA this year by selling products from ultrasound to X-ray machines, according to Visible Alpha consensus estimates. On the same 16 times forward multiple as Healthineers, it alone would be worth almost 22 billion euros – enough to account for almost the entirety of Philips’ own 29 billion euro enterprise value. That implies negligible worth for the other three units, which will produce EBITDA of 1.8 billion euros this year, analysts reckon.
Selling or spinning off the personal health division, which makes toothbrushes and breast pumps for consumers, could help. It has the least relevance to Philips’ core of selling critical machines to hospitals. Barclays analysts reckon the unit’s listed rivals trade at 13 times 2024 EBITDA on average, implying a 9.6 billion euro enterprise value for the business. For Jakobs, unlocking some of that trapped value would go a long way towards getting Philips back to full health.
Follow @karenkkwok on X
CONTEXT NEWS
Koninklijke Philips on July 29 said that its comparable order intake growth, a measure of future revenue that’s adjusted for currency fluctuations, was 9% in the second quarter of 2024. Before that, it was negative or flat for the previous two years.
The Dutch medical-device maker’s shares rose 10.45% to 26.22 euros as of 0913 GMT on July 29.
Philips’ shares trailed Siemens Healthineers since 2021 peak https://reut.rs/3yhtGCU
Editing by Liam Proud and Streisand Neto
Ativos relacionados
Últimas notícias
Isenção de Responsabilidade: As entidades do XM Group proporcionam serviço de apenas-execução e acesso à nossa plataforma online de negociação, permitindo a visualização e/ou uso do conteúdo disponível no website ou através deste, o que não se destina a alterar ou a expandir o supracitado. Tal acesso e uso estão sempre sujeitos a: (i) Termos e Condições; (ii) Avisos de Risco; e (iii) Termos de Responsabilidade. Este, é desta forma, fornecido como informação generalizada. Particularmente, por favor esteja ciente que os conteúdos da nossa plataforma online de negociação não constituem solicitação ou oferta para iniciar qualquer transação nos mercados financeiros. Negociar em qualquer mercado financeiro envolve um nível de risco significativo de perda do capital.
Todo o material publicado na nossa plataforma de negociação online tem apenas objetivos educacionais/informativos e não contém — e não deve ser considerado conter — conselhos e recomendações financeiras, de negociação ou fiscalidade de investimentos, registo de preços de negociação, oferta e solicitação de transação em qualquer instrumento financeiro ou promoção financeira não solicitada direcionadas a si.
Qual conteúdo obtido por uma terceira parte, assim como o conteúdo preparado pela XM, tais como, opiniões, pesquisa, análises, preços, outra informação ou links para websites de terceiras partes contidos neste website são prestados "no estado em que se encontram", como um comentário de mercado generalizado e não constitui conselho de investimento. Na medida em que qualquer conteúdo é construído como pesquisa de investimento, deve considerar e aceitar que este não tem como objetivo e nem foi preparado de acordo com os requisitos legais concebidos para promover a independência da pesquisa de investimento, desta forma, deve ser considerado material de marketing sob as leis e regulações relevantes. Por favor, certifique-se que leu e compreendeu a nossa Notificação sobre Pesquisa de Investimento não-independente e o Aviso de Risco, relativos à informação supracitada, os quais podem ser acedidos aqui.
