LONDON, June 14 (Reuters Breakingviews) - Koninklijke Philips’ (PHG.AS) Chief Executive Frans van Houten has been making up ground on rival medical-technology group Siemens Healthineers (SHLG.DE). Offloading the 40 billion euro company’s domestic appliances business read more and buying heart-monitoring specialist BioTelemetry helped investors focus on the core message: the Dutch group sells market-leading kit in a fast-growing sector. Its valuation discount to its German rival almost disappeared in recent weeks: as recently as early 2021, Philips traded on a forward price-earnings multiple that was around 20% lower.
An unpleasant surprise on Monday morning threatens to interrupt that progress. Philips is recalling some old ventilators and breathing-aid devices for troubled sleepers read more , because certain foam parts could degrade into potentially carcinogenic particles. Van Houten kept full-year financial targets in place, but the company’s market value still dropped 4%. Investors might conclude that Philips’ product-safety checks are subpar, raising the risk of costly future snafus. That would complicate an otherwise healthy equity story. (By Liam Proud)
On Twitter http://twitter.com/breakingviews
Capital Calls - More concise insights on global finance:
Vet IPO shrugs off animal-free trend read more
Biden’s Big Corn battle read more
Paris insurance bust-up ends in humbling defeat read more
Sports retailer SPAC powers M&A cycle read more
Aussie food fight finish augurs more M&A battles read more
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.