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Philips' (PHG) Innovative Product Suite to Cheer Investors

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Koninklijke Philips (PHG - Free Report) is benefiting from a widening portfolio. Philips recently announced several innovative additions to its existing integrated portfolio of cardiology solutions at the American College of Cardiology’s 71st Annual Scientific Session & Expo (ACC 2022).

Philips’ cardiology portfolio already offers solutions, mainly for heart failure, arrhythmia, structural heart disease and coronary artery disease.

To add to the strength and depth of its existing portfolio, Philips launched two major innovations at ACC 2022, namely Philips Ultrasound Workspace and the global availability of Ambient Experience with FlexVision display.

Philips Ultrasound Workspace is a vendor-neutral echocardiography image analysis and reporting solution, accessible via the web. This allows clinicians to create a seamless workflow from the ultrasound room to the reporting room.

Moreover, the availability of a new Ambient Experience solution connecting to Philips Image Guided Therapy System, Azurion, aims to reduce a patient’s anxiety during interventional procedures.

Supply-Chain Issues to Affect Near-Term Sales

With the divestiture of its Domestic Appliances business, Philips evolved in the market as a pure healthcare provider.

Philips witnessed solid demand for patient monitors, hospital ventilators, computed tomography and portable ultrasound systems amid the coronavirus outbreak. Philips is benefiting from strong demand for Image-Guided Therapy, Diagnostic Imaging, Ultrasound and Hospital Patient Monitoring system.

Driven by Philips’ attractive portfolio, comparable order intake for the Diagnosis & Treatment businesses increased 10%, with double-digit growth in Image-Guided Therapy and mid-single digit growth in Ultrasound during the fourth quarter of 2021.

Philips recently provided an update that its innovative lung cancer diagnosis and treatment solution Philips Lung Suite is gaining international traction, evident from its rapid rollout with new clinical partners.

Philips will be collaborating with Nuvo Group to address maternal care disparities, specifically in rural areas and develop home-monitoring services for prescribed prenatal care.

The alliance with Philips will help Nuvo, a remote pregnancy monitoring platform, develop a better pregnancy care experience from the prenatal stage through labor and delivery.

However, rising supply-chain issues due to the pandemic had negatively impacted Philips’ top-line growth in the fourth quarter of 2021. The supply-chain management issues are still prevalent globally and pose a significant threat to Phillip’s near-term profitability.

In addition, the rising prices of raw materials are weakening Philips’ ability to sustain competitiveness in the markets it operates in.

Further, Philips Respironics voluntarily recalled ventilators, bi-level positive airway pressure and positive airway pressure machines due to potential health hazards, which hurt sales in the last reported quarter.

Philips witnessed a 32% year-over-year decline in comparable sales and a double-digit decline in Sleep & Respiratory Care in the last reported quarter, because of the Respironics field action.

The Personal Health businesses’ comparable sales decreased 3%, mainly induced by supply-chain shortages.

In the short term, Philips anticipates witnessing a significant volatility and headwinds related to COVID-19 and supply-chain challenges, despite its ongoing mitigation efforts.

Philips expects to start fiscal 2022 with a comparable sales decline, followed by a recovery and a strong second half of the year.

Zacks Ranks and Stocks to Consider

Currently, Philips has a Zacks Rank #5 (Strong Sell)

Shares of Philips have fallen 17.2% in the year-to-date period compared with the Zacks Medical-Products industry and the Medical sector’s decline of 6.2% and 3.9%, respectively.

Some better-ranked stocks in the Zacks Medical sector are AMN Healthcare Services (AMN - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Abcam and Acumen Pharmaceuticals (ABOS - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare Services’ shares have dropped 14.7% in the year-to-date period compared with the Zacks Medical Services industry and the Medical sector’s decline of 17.6% and 3.9%, respectively.

The Abcam stock has plunged 22.4% in the year-to-date period compared with the Zacks Medical – Instruments industry and the Medical sector’s decline of 10.5% and 3.9%, respectively.

Shares of Acumen Pharmaceuticals have tanked 42.2% in the year-to-date period compared with the Zacks Medical - Biomedical and Genetics industry and the Medical sector’s decline of 11.8% and 3.9%, respectively.


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