Philips reported strong 2025 sales of €17.8 billion with 2% growth, ending with a 7% growth in Q4. Profitability improved, with an EBITA margin of 15.1% in Q4. Cash flow was robust at €1,391 million in Q4. 2026 guidance includes 3-4.5% sales growth and free cash flow of €1.3-1.5 billion.

Despite a €1,025 million recall-related payment, Philips is transitioning from a turnaround to a compounder. Q4 showed growth, margin expansion, and strong cash flow. The company aims for mid-single-digit sales growth and a mid-teens EBITA margin by 2028. Tariffs impacted performance, but margins still grew.

Connected Care and Personal Health segments saw improved profitability, while Diagnosis and Treatment grew. Medium-term targets aim for a mid-teens margin by 2028, indicating confidence in compliance and quality investments. Philips is focusing on a platform narrative, emphasizing innovation at the intersection of hardware, software, data, and AI.

Philips faces ongoing Respironics risks, but the market is responding positively to cash generation and debt repayment. The company must convert strong order intake into sustained growth with higher margins despite tariff pressure. Investors seek evidence of durable growth post-Q4 and normalized free cash flow.

Investors are watching to see if Philips can maintain steady growth and profitability, shifting the narrative from recovery to rerating. The company must navigate legal and macroeconomic challenges to continue building trust quarter by quarter. Market interest in Philips’ potential is high, with comparisons to Nvidia.

Read more at Yahoo Finance: Philips Says The Turnaround Is Real And The Market Believes It