Philips Stock Plummets 17% After Full-Year Outlook Cut

Philips (NYSE:PHG) shares plunged more than 17% pre-market today after the company reported disappointing third-quarter results, with revenue missing analyst expectations and a downward revision of its full-year growth forecast, driven largely by softening demand in China.

The company’s revenue fell 3% short of consensus estimates, while order intake decreased by 2%, following a robust performance in the prior quarter. Although adjusted EBITA aligned with expectations, analysts from UBS highlighted that the figure was bolstered by an unusually high contribution from royalty income. Excluding this boost, the adjusted EBITA would have fallen 8% below projections.

The weaker-than-expected revenue raised concerns about Philips’ overall growth trajectory, prompting the company to lower its full-year revenue growth forecast from 3%-5% to a narrower range of 0.5%-1.5%. This revision reflected the growing uncertainty in key markets, particularly in China, where demand has faced increased pressure.

Performance varied across Philips' divisions, with several segments missing targets. Diagnosis & Treatment sales were 3% below expectations, reflecting a modest 1% organic decline, a notable miss compared to the anticipated 2% growth. Connected Care and Personal Health segments also lagged, each missing forecasts by 3% and 7%, respectively, with both seeing flat or negative organic growth instead of the expected gains.

UBS analysts emphasized that despite the temporary lift from royalty income, underlying profitability challenges persisted, adding to the headwinds Philips faced in a challenging market environment.