PHG - Philips downgraded to neutral at UBS on sleep products litigation overhang

UBS has downgraded Philips (NYSE:PHG) to neutral from buy citing the potential for lawsuits stemming from the company's recall of some of its sleep apnea machines. The firm also lowered its price target to €29 from €49 (~2% return based on Tuesday's close in Europe). Analyst Graham Doyle said that while shares look cheap compared to others in the sector, it is less so compared to value peers in the mid-term outlook. Given that Philips (PHG -0.1%) is at the start of mass litigation related to its sleep machines in the U.S., clarity on what the impact might be is not expected until mid 2023, he added. Doyle noted that many investors are sensitive to a lawsuit overhang. Earlier in March, Philips (PHG -0.1%) was ordered by the U.S. FDA to further notify users of its sleep products about the recall.

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Philips downgraded to neutral at UBS on sleep products litigation overhang