Philips (XAMS:PHIA, Financial) (Netherlands) is a global provider of health technology products through its personal health, connected care, and diagnosis & treatment segments. After a year of poor share price performance stemming from a product recall within its sleep franchise as well as supply chain issues that proved more severe than its peers, we believe Philips is now priced attractively for long-term investors. Despite potential legal liabilities from the sleep recall, we believe the recent lost market share should mostly be recovered in the coming years due to a favorable market structure. Moreover, we appreciate the company’s 100% focus on the medical technology space following the sale of its domestic appliances business. We believe Philips’s current portfolio is positioned to support long-term revenue growth of about 5% per year and normalized margins in the mid-teens.
From David Herro (Trades, Portfolio)'s Oakmark International Fund first-quarter 2022 commentary.
