Philips: Limited Margin Upside and Balanced Risk-Reward Support Neutral (Hold) Rating

Analyst Julien Ouaddour of Bank of America Securities reiterated a Hold rating on Koninklijke Philips N.V., retaining the price target of €28.00.

Julien Ouaddour has given his Hold rating due to a combination of factors related to Philips’ near‑term performance and longer‑term outlook. He expects fourth‑quarter 2025 results to be broadly in line with market expectations on sales growth, with only slightly better performance in Diagnosis & Treatment and modest year‑on‑year margin improvement, largely driven by productivity savings offsetting tariff headwinds. However, with most cost efficiencies already realized and tariffs fully embedded, he sees only limited margin expansion potential into 2026, and his EBITA forecast sits below the current market consensus.

At the same time, investor sentiment and the share price have already improved significantly since mid‑year lows, which in his view reduces the upside from current levels and leads to a more balanced risk‑reward profile. He also anticipates that management will need to dial back its previous mid‑ to high‑teens margin ambitions beyond 2025, implying a more gradual profitability trajectory that depends on a re‑acceleration of revenue growth above the low single‑digit pace seen in recent years. Potential longer‑term upside from better growth and margin delivery exists, but with guidance risk, FX pressures, portfolio changes, and unresolved issues such as the Consent Decree and US CPAP market re‑entry, he judges that the stock is fairly valued around current levels, supporting a Neutral (Hold) stance.

According to TipRanks, Ouaddour is a 4-star analyst with an average return of 18.3% and a 67.86% success rate. Ouaddour covers the Healthcare sector, focusing on stocks such as Koninklijke Philips N.V., Smith & Nephew, and Alcon.

In another report released today, Bernstein also maintained a Hold rating on the stock with a €22.70 price target.