Reinitiating on Philips: Upgrading to Wide Moat and Raising Fair Value Estimate

Following our initiations on GE Healthcare and Siemens Healthineers and subsequent to the litigation resolution in the sleep care business, we have taken a fresh look at Koninklijke Philips. We're upgrading the company's moat to wide given Philips' position as one of the leaders in imaging and image-guided therapies. The company's track record is checkered, with multiple self-induced missteps tarnishing its reputation and investor confidence, but we believe the resolution of sleep care problems, focus on its high-performing areas, and new management team should be able change the narrative. We're raising our fair value estimate to EUR 35/USD 39 per share. We believe shares are undervalued at current levels, even with the higher level of uncertainty relative to its peers.