Koninklijke Philips N.V. ( PHG Quick Quote PHG - Free Report) recently announced that it is collaborating with Cognizant ( CTSH Quick Quote CTSH - Free Report) to develop health solutions that will help healthcare and life science companies provide improved patient care and accelerate clinical trial procedure. The deal will combine HealthSuite, Philips’ cloud-based platform, with Cognizant’s digital engineering expertise. HealthSuite, which is built on Amazon’s ( AMZN Quick Quote AMZN - Free Report) cloud platform Amazon Web Services (AWS), securely stores critical healthcare data and provides both advanced data analytics and AI capabilities. HealthSuite integrates more than 100 types of medical devices, and over 145 billion clinical images are archived on the cloud platform. Cognizant, on the other hand, will build, deploy and operate client-specific applications on HealthSuite. These customized solutions are scalable, and will include advanced data analytics which help in improving both patient and clinician experience. Expanding Partner Base Boosts Prospects
Philips’s growth trajectory has been driven by an expanding partner base. Apart from Cognizant, the medical devices manufacturer recently inked a partnership with likes of NICO.LAB, the Spanish National Center for Cardiovascular Research (“CNIC”), Elekta, and Akumin, among others.
Philips’s collaboration with NICO.LAB, a MedTech stroke care company, will help it to better manage patients who suffer from a stroke. Philips already has a strong portfolio of stroke care solutions with increased capability of its Image Guided Therapy System, Azurion. The partnership with NICO.LAB adds StrokeViewer, a cloud-based, end-to-end AI-based stroke triage and management solution, to the company’s offerings. The collaboration with the CNIC is helping Philips develop a magnetic resonance (“MR”) imaging technique that has the potential to revolutionize the use of MR imaging in cardiology. The Philips-Elekta extended partnership will boost the former’s expertise in cancer care. The Akumin partnership will see deployment of Philips’ new Radiology Operations Command Center across Akumin’s outpatient imaging centers and co-create clinical standards for Akumin’s MR and CT imaging modalities. Apart from an expanding partner base, Philips is expected to benefit from increased demand in the Diagnosis & Treatment and Personal Health businesses. The company continues to witness solid demand for patient monitors, hospital ventilators, computed tomography and portable ultrasound systems due to the coronavirus outbreak. Increased interest in telehealth solutions like tele-ICU, tele-radiology and tele-pathology, which help virtual working and collaboration of healthcare professionals, bodes well for Philips. For the 2021-2025 period, Philips now expects comparable sales growth between 5% and 6%, annually. Adjusted EBITDA margin is likely to increase 60-80 bps annually. Free cash flow is expected to be €2 billion by the end of this time frame. Philips shares have underperformed the industry year to date. The company has lost 14.4% against the Zacks Medical-Products industry’s return of 3.5%.
Recall of some Bi-Level Positive Airway Pressure (Bi-Level PAP), Continuous Positive Airway Pressure (CPAP), and mechanical ventilator devices in the United States is expected to keep the shares under pressure. The recall is expected to hurt Sleep & Respiratory Care’s top line in 2021. Moreover, increased costs, €500 million to date, is expected to hurt profitability.
Zacks Rank & A Stock to Consider
Philips currently has a Zacks Rank #2 (Buy).
National Vision Holdings ( EYE Quick Quote EYE - Free Report) , which flaunts a Zacks Rank #1 (Strong Buy) is a stock worth considering in the same industry. You can see the complete list of today’s Zacks #1 Rank stocks here. Long term earnings growth rate of National Vision Holdings is pegged at 23.01%.
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