Philips: Framing The Opportunity Of Potential Return To US Sleep

This report examines the investment case for Philips, highlighting the potential for a return to the US Sleep systems market as a catalyst for growth. Goldman Sachs maintains a Buy rating on the stock with a €31.50 price target.

Key Takeaways

• 1.Philips is currently rated Buy with a price target of €31.50, supported by robust operating performance and potential upside from a return to the US sleep systems market.
• 2.A potential return to the US sleep market could drive incremental EBITA and EPS upside of 2-8% by FY27-FY29, depending on the speed and scale of market share recapture.
• 3.The DME market structure, dominated by four major players, is highly consolidated and supportive of a potential rapid re-entry for Philips.

Table of Contents

• Philips (PHG.AS)
• 6 key charts
• June 2021 product recall in US Sleep was the start of a challenging period for Philips
• Return to market OUS seems to be building momentum
• Return to US sleep systems could present incremental upside to our estimates and company guidance
• DME market structure seems conducive to rebuilding presence
• Framing the opportunity - What could return to US sleep look like for growth and EBITA?
• Other consideration...
• Incremental revenue with attractive drop through could drive upside to our group EBIT and EPS forecasts
• DMEs market structure supportive of competition and scale distribution
• Other market share considerations
• Valuation
• Disclosure Appendix

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