PHIA: Model update

Research evidence excerpt

PHIA: Model update

Koninklijke Philips N.V.

Target/Upside/Downside Scenarios Investment summary

Philips is one of the leading players in medical imaging, image-Koninklijke Philips N.V.

guided therapy and patient-monitoring markets, as well as

34 125 Weeks 06FEB24 - 29JUN26 other connected care and personal health categories, with

32 c.70% of group sales coming from markets where it holds no.1

28 or no.2 positions.

26 TARGETTARGET 25.0025.00

24 CURRENTCURRENT 23.8323.83 After facing several challenges, including the Respironics 22

20 recall, supply chain and other execution issues, the company

16 has undergone a period of significant reorganisation,

14 delivered €2.5bn in productivity savings over 2023-25 and

40m guides to a further €1.5bn to be delivered over 2026-28.

30m

20m

10m

2024 2025 2026 At its CMD in February 2026, Philips guided towards an

F M A M J J A S O N D J F M A M J J A S O N D J F M A M

J acceleration in sales growth to a mid-sd CAGR over 2026-28 PHIA NA Rel. MSCI EUROPEAN INDEX MA 40 weeks

Source: Bloomberg and RBC Capital Markets estimates for Target and improvement in margins to mid-teens over the period.

We are slightly more cautious, forecasting +4% CER sales CAGRValuation

and margin improvement to 14.0% by 2028E, as we look forTo account for Philips' lower sales growth outlook, lower

further proof of execution, particularly in the Diagnosis &margins and returns versus key peers, combined with its

Treatment segment.execution and ongoing regulatory risk, we apply a 15%

discount to our peer-derived SOTP. This is based on median Trading on 9x FY26E EV/EBITDA and 15x P/E, the stock has

peer CY26E EV/adj. EBIT multiples, applied to our CY27E recovered from 2022 lows and now trades closer to pre-

estimates: 13x for Diagnosis & Treatment (45% group adj.