On Sep 21, we issued an updated research report on Koninklijke Philips N.V. (PHG - Free Report) .
The company reports operations primarily under three segments - Personal Health businesses (accounted for 41.1% of total sales in 2017), Diagnosis & Treatment businesses (38.8%), and Connected Care & Health Informatics businesses (17.8%). The company also identifies HealthTech Other and Legacy Items.
Philips is gradually evolving as a healthcare company, having augmented its presence in the domain, primarily driven by an expanding portfolio.
Notably, the stock has gained 22% on a year-to-date basis, outperforming the industry’s rally of 11.1%.
Factors Influencing the Stock
Philips is gradually evolving as a healthcare company. The company is presently focusing on key opportunities in population health management, while improving its enterprise-wide solutions for health systems, and collaborating with healthcare organizations to enhance its stronghold in the healthcare industry. The company is expected to benefit from its focus on providing value-based care in the North American healthcare market.
Philips’ portfolio strength is driving growth in the Diagnosis & Treatment business. Increasing installed base of Access CT, and continued growth in IQon spectral CT and Vereos digital PET/CT systems are key catalysts.
Koninklijke Philips’ portfolio has significantly benefited from acquisitions. The notable acquisitions undertaken by the company are: Volcano in 2015, Spectranetics in 2017, and EPD solutions and Remote Diagnostic Technologies (RDT) this June. These acquisitions have strengthened the company’s dominant position in the resuscitation and emergency care market, which is currently worth almost €1.4 billion.
However, Philips’ near-term profitability is likely to be hurt by rising prices due to tariff imposition and sluggish growth in maturing personal care market. Additionally, the escalating trade war between the United States and China doesn’t bode well for Philips. The additional tariff imposition is expected to compel this Zacks Rank #3 (Hold) company to raise prices, which may in turn hurt customer base expansion.
Stocks to Consider
Some better-ranked stocks in the broader technology sector include Vishay Intertechnology, Inc. (VSH - Free Report) , Paycom Software, Inc. (PAYC - Free Report) and NetApp, Inc. (NTAP - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vishay Electronics, Paycom Software and NetApp have a long term-expected EPS growth rate of 9.2%, 25.5% and 14.1%, respectively.
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