Philips Recalls Sleep Devices over Health Risks; Shares Fall 4%
Koninklijke Philips (PHG) has initiated a voluntary recall of some of its sleep and respiratory care devices due to health concerns. Philips stock fell 3.98% on June 14 following the recall announcement. The company does not expect the product recall to affect its full-year 2021 revenue projection because it sees the strength of its other businesses offsetting the impact of the affected unit.
Philips’ product recall applies to Bi-Level Positive Airway Pressure (Bi-Level PAP) and Continuous Positive Airway Pressure (CPAP) devices as well as mechanical ventilators. The company found that the sound abatement foam used in these devices can degenerate and release harmful particles that if inhaled can cause inflammation, irritation, headache, or even pose the risk of cancer.
“We deeply regret any concern and inconvenience that patients using the affected devices will experience because of the proactive measures we are announcing today to ensure patient safety,” said Philips CEO Frans van Houten in a press release.
The company has launched a program to repair and replace the affected devices. The work will involve using a new material in place of the current sound abatement foam. As it works on correcting the problem, Philips has urged patients using the affected machines to talk with their doctors about what they need to do. (See Philips stock analysis on TipRanks)
Kepler Capital analyst Oliver Reinberg reiterated a Hold rating on Philips stock with a price target of $53. Reinberg’s price target implies 1.7% downside potential.
Consensus among analysts is a Hold based on 1 Buy, 1 Hold, and 1 Sell. The Philips average analyst price target of $59.98 implies 10.5% upside potential to current levels.
Philips scores a 5 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.
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