Philips' Capital Markets Day Aims to Shift the Narrative; Shares Undervalued

As Philips navigates restoring investor trust, the company's capital markets day was a clear attempt to highlight the strengths and opportunities of the core franchises while trying to assuage concerns around lackluster organizational quality control and operational execution. For us, there were three clear takeaways. First, the company's product portfolio and pipeline in imaging, particularly image-guided therapy, or IGT, is healthy. Secondly, the informatics business is attractive, but there are questions around pricing and the company's ability to leverage investments that should accelerate profitability if successful. Lastly, execution is key, and the largely overhauled management team has significant challenges ahead of it. We're maintaining our fair value estimate and view shares as undervalued at current levels as the market continues to value the company at a discount to its peers.