Shares
in
Philips
(PHIA)
are
up
30%
on
news
of
a
$1.1
billion
(£887
million) settlement
in
US
class
action
lawsuits
with
patient
organisations
over
personal
injury
claims –
and
with
the
US
medical
regulator,
who
in
return
will
waive
further
claims.
For
this,
Philips
has
created
a
provision
of
€982
million
(£839.9
million)
in
the
first
quarter.
In
addition,
Philips
says
it
will
receive
€540
million
from
its
insurers
to
settle
product
liability
claims.
Investors
appreciate
the
clarity
and
the
settlement
amount
seems
to
be
better
than
expected,
as
ING
analysts
had
previously
assumed
the
provision
would
amount
to
€3
billion.
Philips
shares
opened
a
spectacular
37%
higher,
after
which
they
narrowed
slightly
to
a
still-whopping
28%
at
€25.44.
At
the
time
of
writing
shares
are
up
33%
to
€26.29.
Key
Morningstar
Metrics
For
Philips
Shares
•
Morningstar
Rating:
3
Stars
•
Fair
Value:
€21
•
Economic
Moat:
Narrow
•
Morningstar
Uncertainty
Rating:
High
Order
Intake
Squeezed
by
China
It’s
not
all
good
news.
Philips
faces
an
order
intake
squeeze,
and
orders
have
fallen
for
a
successive
six
quarters.
For
the
first
quarter
of
2024
they
were
down
-3.8%,
the
seventh
consecutive
quarter
of
decline.
Chief
exevcutive
Roy
Jakobs
says
China
is
to
blame.
Excluding
China,
order
intake
actually
grew.
The
€982
million
provision
for
the
US
settlement
(with
two
other
provisions
for
Respironics
totalling
€1.1
billion)
also
somewhat
distorts
the
results,
as
it
leads
to
a
net
loss
in
the
first
quarter
of
€998
million,
compared
to
a
€665
million
loss
in
the
first
quarter
of
2023,
when
it
included
€868
million
in
provisions.
What
to
Expect
From
Philips
Shares?
Philips
has
now
raised
its
expectation
for
free
cash
flow
in
2024
to
between
€900,000,000
€1.1
billion.
That
includes
the
insurance
payout,
but
not
the
settlement
in
the
patient
class
action,
which
will
now
be
paid
out
in
2025.
Furthermore,
Philips
assumes
comparable
sales
growth
of
3-5%
and
an
adjusted
EBITDA
margin
of
11-15%
for
2024.
In
the
first
quarter,
those
were
2%
and
9.4%,
respectively.
This
article
was
originally
translated
from
our
Dutch
sister
site
and
has
been
edited
and
republished
for
UK
audiences
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