Philips (PHG)

Equity Research 29 July 2026 | 5:00AM BST

Philips (PHG.AS) Rising costs and tougher comps; remain Buy but acknowledge more challenging set up into H2 26

PHG.AS 12m Price Target: €29.00 Price: €22.41 Upside: 29.4% BUY Richard Felton, CFA Philips shares traded sharply lower post Q2 26 results (-4.8% vs | Goldman Sachs International SXDP +1.4%) as investors focused on (1) a material underlying miss Lauren Mitchell on D&T margin, (2) near term concerns on revenue growth outlook, | Goldman Sachs International fueled by soft order intake and subdued growth in D&T and Connected Care in conjunction with tougher comparatives for Personal Health into H2 26, and (3) perception of execution risk on the level of Q4 26 margin expansion required to meet FY 26 guidance, as well as risk that annualisation of higher input costs Key Data _____________________________________ Market cap: €21.8bn / $24.8bn weighs on margin beyond FY26e. Enterprise value: €26.0bn / $29.6bn 3m ADTV: €49.0mn / $56.6mn Netherlands We acknowledge those concerns and have updated our estimates to Europe MedTech reflect a more conservative scenario for organic growth and M&A Rank: 3 Leases incl. in net debt & EV?: Yes margins. For FY26e, GSe now at +3.7% organic growth (vs +3.9% GS Forecast __________________________________ previously) and adjusted EBITA margin excluding tariff refunds of 12/25 12/26E 12/27E 12/28E

12.5% (vs 12.9% previously). We have also lowered our estimates for Revenue (€ mn) New Revenue (€ mn) Old 17,834.0 17,834.0 17,916.7 18,149.8 18,692.1 18,936.6 19,502.7 19,849.9 FY27/28 (adjusted EBITA -4-5%). Primarily as a result of lower EBIT (€ mn) 1,424.0 1,886.9 2,050.6 2,368.4 EPS (€) New estimates, we have reduced our 12m target price to €29 (from €32). EPS (€) Old P/E (X) Taking a step back we do believe certain details in results do Dividend yield (%) 3.7 3.8 3.8 3.8 CROCI (%) remain supportive of our broader thesis on Philips. (1) Precision N debt/EBITDA (ex lease,X) 2.0 1.3 0.8 0.3 Diagnostic order intake ex-China delivered double digit growth, 3/26 6/26 9/26E 12/26E driven by traction for recently launched innovation, (2) Order intake EPS (€)

grew strongly in Europe where Philips is benefiting from an uptick in GS Factor Profile ______________________________ investment levels and execution, (3) Strong underlying momentum Growth

for Personal Health continues, supported by innovation and Financial Returns

improving commercial execution (4) Strong FCF generation which Multiple supported Y/Y deleveraging to 1.8x net debt to EBITDA. Integrated

On our updated estimates Philips is now trading on 13.2x NTM P/E. To drive better share price performance from here, we believe Percentile 20th 40th 60th 80th 100th

Philips would need to deliver on its FY26e guidance, which would PHG.AS relative to Europe Coverage

require successfully navigating increased cost pressures, continue to PHG.AS relative to Europe MedTech

drive innovation to support order intake and ultimately drive Source: Company data, Goldman Sachs Research estimates. See disclosures for details. improving growth trends for D&T and Connected Care.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Philips (PHG.AS)

Philips (PHG.AS) Balance Sheet (€ mn) _______________________________________ BUY Rating since Jul 12, 2023 12/25 12/26E 12/27E 12/28E Cash & cash equivalents 2,794.0 3,929.7 5,074.0 6,367.5 Accounts receivable 3,530.0 3,493.8 3,551.5 3,608.0 Inventory 2,870.0 2,866.7 2,897.3 2,925.4 Ratios & Valuation __________________________________________ Other current assets /25 12/26E 12/27E 12/28E Total current assets 9,932.0 11,028.1 12,260.7 13,638.9 EV/sales (X) 1.5 1.4 1.3 1.2 Net PP&E 2,217.0 1,682.1 1,191.5…