PHG - Societe Generale downgrades Philips after poor Q2 show

Philips ( NYSE: PHG ) stock continues to be in red following the firm's Q2 earnings announcement and guidance cut that prompted Societe Generale to downgrade the stock to hold from buy.

The rating is in line with SA Quant rating of hold , but is in contrast to SA Authors rating of buy .

Q2 comparable sales declined -7% Y/Y to €4.18B amid supply shortages and prolonged lockdowns in China, impacted by "global, industry-wide challenges including supply shortages, COVID lockdown measures in China, inflationary pressures and the Russia-Ukraine war."

The firm expects to see a "challenging macro-environment" through the rest of the year, although it will implement supply chain measures to convert its order book to revenue and pricing and increased productivity measures to expand margins.

Consequently, full-year 2022 outlook has been revised to 1-3% comparable sales growth (down from 3-5% range) and ~10% adj. EBITA margin.

Jefferies, which also rates PHG as hold, said that the Q2 earnings were "significantly below" consensus estimates and its guidance cut will "likely disappoint."

Barclays also highlighted the big earnings miss and 2022 guidance cut, but noted that order intake was one of the few positives, rising 1% despite headwinds although the comparative period last year was relatively slow.

PHG shares are trading at $20.58 ( -7% ) today, well below the firm's 52-week of $48.72.

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