Analyst Note| Javier Correonero |
Philips reported fourth-quarter 2022 results together with a medium-term strategic update. Shares are up 7% on Jan. 30 as Philips announced an extra 6,000 job cuts (in addition to 4,000 already announced in October) and organizational changes. Investors have been concerned in recent months about Philips' company-specific issues such as the sleep and respiratory product recall, ongoing supply chain issues, and lack of action. Management has also taken a more conservative stance on midterm guidance compared with what it did in its 2020 capital markets day. The guided range for sales growth and margin expansion is now wider, providing more room for inaccuracies in forecasting. Philip’s management has been weak in meeting its own financial targets recently, which were either too optimistic or didn’t consider external factors like supply chain issues. We maintain our EUR 25 fair value estimate.