- Philips announced the sale of its Domestic Appliances business for EUR 3.7B, or EUR 3.0B after taxes, and a 15-year licensing revenue stream worth EUR 0.7B today.
- While the sale of Domestic Appliances will lead to lower near-term revenue, profits, and cash flow, the price was better than expected and management can redeploy the capital into M&A.
- First quarter results are likely to reflect some ongoing pressures on elective procedures from the COVID-19 resurgence, but 2021 should see case counts and equipment orders normalizing.
- Philips remains undervalued below the low-to-mid-$60s on rebounding revenue, improving margins, and a "show me" story that management can drive better long-term results.
For further details see:
Philips Leveraged To Post-COVID Normalization And Self-Improvement