Philips
Note: This is a daily stock update and the information stands true as of 03/11/26, 09:00 CET
Sales reached €4.4bn, up 2.7% on a comparable basis, slightly below the anticipated 3.1% growth. By segment, Personal Health and Connected Care grew by 7.7% and 5%, respectively, while Diagnosis & Treatment declined modestly by 0.3%.
Comparable order intake increased by 8%, driven by growth in Diagnosis & Treatment.
Profitability improved, with the adjusted EBITA margin increasing by 70bp to 13%, versus market expectations of 11.8%. Higher sales, a higher gross margin and productivity measures drove the improvement, partly offset by cost inflation. Overall, Q3 EBITA came in c 9% ahead of consensus.
Guidance was reiterated. Sales are projected to grow by 3% to 4.5%. Including the US tariff refund, the adjusted EBITA margin is guided at 13.5% to 14%, with free cash flow of €1.5-1.7bn.
Most importantly, the largest legal unknown is now a known number. Philips Respironics reached an agreement in principle with the US Department of Justice to resolve the previously disclosed criminal and civil investigations related to the Respironics recall.
Philips consequently recorded a €288m provision, which we consider modest relative to the group's full-year free cash flow guidance of EUR 1.5bn–1.7bn. In addition, the Enterprise Chamber of the Amsterdam Court of Appeal denied requests from certain investors for an investigation into Philips' affairs in connection with the Respironics recall.
Philips consequently recorded a €288m provision, which we consider modest relative to the group's full-year free cash flow guidance of EUR 1.5bn–1.7bn. In addition, the Enterprise Chamber of the Amsterdam Court of Appeal denied requests from certain investors for an investigation into Philips' affairs in connection with the Respironics recall.
Expert Opinion:
Beyond the good Q3 results, the legal agreement in the US is potentially a game changer for the equity story as it removes a significant uncertainty and the EUR288m amount looks very manageable. Philips has suffered from a substantial litigation and regulatory overhang since 2021.
Greater visibility over its liabilities should progressively allow investors to focus on underlying earnings growth rather than exceptional charges. Unlike Bayer where we only have 16% upside, our fair value on Philips implies a c 58% upside, making it a very compelling value proposition.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
Beyond the good Q3 results, the legal agreement in the US is potentially a game changer for the equity story as it removes a significant uncertainty and the EUR288m amount looks very manageable. Philips has suffered from a substantial litigation and regulatory overhang since 2021.
Greater visibility over its liabilities should progressively allow investors to focus on underlying earnings growth rather than exceptional charges. Unlike Bayer where we only have 16% upside, our fair value on Philips implies a c 58% upside, making it a very compelling value proposition.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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