JP Morgan: Royal Philips N.V. Sponsored ADR (PHG.US) Q2 performance lacks major "surprises" reiterates "neutral" rating.

Morgan Stanley released a research report, reiterating a "neutral" rating on Koninklijke Philips N.V. Sponsored ADR (PHG.US). Koninklijke Philips N.V. Sponsored ADR will announce its second quarter 2026 financial report on July 28th. Morgan Stanley believes that its performance is generally in line with market expectations and advises investors to wait and see before the financial report is released. Specifically, Morgan Stanley's forecast for Koninklijke Philips N.V. Sponsored ADR's second quarter revenue and profit margin is generally consistent with market expectations, but there are slight differences in expectations for each business segment. Morgan Stanley's expectations for Koninklijke Philips N.V. Sponsored ADR's revenue and profit margins in 2026 also largely align with market expectations. Koninklijke Philips N.V. Sponsored ADR has been guiding market expectations ahead of the financial report, indicating a year-on-year decline in profit margin in the second quarter, which is already reflected in market expectations. However, based on historical performance, Koninklijke Philips N.V. Sponsored ADR's financial report performance is likely to exceed market expectations, making it more difficult for short sellers to operate. Nevertheless, from the perspective of order growth, Koninklijke Philips N.V. Sponsored ADR will face pressure from high base comparisons in the second quarter, and market share is likely to continue being eroded by Siemens Healthineers, which has already revealed impressive order performance in the second quarter of 2026. Short-selling funds are mainly focusing on this risk point, so Morgan Stanley also does not recommend investors to buy Koninklijke Philips N.V. Sponsored ADR before the financial report is released. Koninklijke Philips N.V. Sponsored ADR Q2 performance outlook Morgan Stanley's overall revenue forecast for Koninklijke Philips N.V. Sponsored ADR is 0.3% lower than market expectations, mainly due to the bank's slightly conservative assumption about organic growth: Morgan Stanley predicts an organic growth rate of 3.4%, while the market expects 3.8%. Morgan Stanley's forecasts for each business segment have slight differences compared to market expectations: - Personal Health (PH): Morgan Stanley predicts organic growth of 3.5%, while the market expects 5.2%; - Diagnosis & Treatment (D&T): Morgan Stanley predicts organic growth of 3.0%, while the market expects 2.5%; - Connected Care (CC): Morgan Stanley predicts organic growth of 4.0%, while the market expects 4.3%. On the adjusted EBITA level, Morgan Stanley predicts an overall profit margin of 12.1%, in line with market expectations. The bank's profit margin forecast for Personal Health is slightly lower than the market's, but its forecast for Diagnosis & Treatment is higher, offsetting each other. Koninklijke Philips N.V. Sponsored ADR 2026 performance outlook Affected by exchange rate factors, Morgan Stanley predicts a 3.9% revenue growth for Koninklijke Philips N.V. Sponsored ADR in 2026, compared to the market's expectation of 3.8%. The company's official guidance range is 3%-4.5%. In terms of business segments, Morgan Stanley predicts organic growth rates of 3.5% for Diagnosis & Treatment, 4.5% for Personal Health, and 4.0% for Connected Care, which are largely in line with market expectations. On the adjusted EBITA level, Morgan Stanley predicts an overall profit margin of 12.7%, largely consistent with market expectations. The company's official guidance range is 12.5%-13.0%. Maintaining a "neutral" rating Overall, Morgan Stanley maintains a "neutral" rating on Koninklijke Philips N.V. Sponsored ADR. The bank believes that the stock's valuation should be significantly lower than Siemens Healthineers (2026 financial year EV/EBITDA of 11.3 times) and GE Healthcare (9.2 times). After the resolution of the risks related to ventilator personal injury lawsuits, the market's reasonable valuation range for Koninklijke Philips N.V. Sponsored ADR is 8.5-9.5 times EV/EBITDA, a judgment that Morgan Stanley agrees with. Morgan Stanley is concerned about the profit growth prospects of Koninklijke Philips N.V. Sponsored ADR: the space for cost reduction is nearing its limit, revenue growth must rely on significant improvements in Diagnosis & Treatment business, and the high growth momentum of the Personal Health business in the second half of 2025 is difficult to sustain.