Philips Electronics (PHG)

Given the reduced visibility in the global economy, which progressively deteriorated during the quarter, Koninklijke Philips Electronics N.V. (PHG - Analyst Report) has decided to restructure businesses in all three sectors, which led to additional charges in the Q1FY09. This has caused us to reduce overall revenue growth rate to negative 7.73% in Euro terms, for 2009 compared to negative 2.2% recorded for 2008.

The revenue growth rate in terms of dollars is projected at negative 17% for FY09 compared to 3.78% for FY08. The company is working to improve its cost structure and its EBITA margins have declined in 1Q09 due to restructuring charges booked.

Based on these results, we are maintaining our Sell rating on PHG with a price target of $17.00 or 24.9x 25.1x our 2009 EPADS estimate of $0.68.