Philips: UBS cuts target price
(CercleFinance.com) - UBS maintains its "buy" rating on Philips, but trims its target price from 48 euros to 47 euros to account for lost ventilator sales.
The Dutch health-technology group said on Monday that it was informed of the partial termination of a deal with the US to supply 43,000 hospital ventilators through to December 2020.
Philips will complete its deliveries this month, with a total of 12,300 ventilators supplied, meaning that the company will not provide the remaining 30,700 ventilators.
"Philips had added manufacturing lines and increased production 4x to meet higher vent demand," UBS wrote in a note.
The broker reminded that Philips received a letter from the US House of Representatives claiming that Philips had delays in 2017-2018 that caused failures vs. contractual requirements for ventilators and that the government paid higher prices than necessary.
Philips denied the statement, saying that it had not raised prices specifically to profit from the crisis, UBS said.
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