Philips stock price dips despite strong Q1 sales. Here’s why

Shares of Philips (AMS: PHIA) have plunged nearly 4% today despite the Dutch company reporting very strong first-quarter sales.

Fundamental analysis: Robust sales pave the way for a hike in 2021 guidance 

Philips reported revenue of €3.8 billion ($4.6 billion) for its first quarter to mark a 9% growth in the comparable sales. This is better than the 6% expected from the market analysts. 

The company’s core business - Connected Care - saw a decline in order intake by 5% year-over-year, which is understandable and “anticipated” given the record orders recorded in Q1 last year amid the pandemic. 

The company reported a loss of €34 million on the back of a €250 million provision Philips was forced to take to address a component quality issue. On an adjusted basis, the Dutch company reported a profit of €139 million.

Adjusted EBITA surged to €362 million to top the €208 million reported a year ago. Surveyed market analysts were expecting €326 million. As a result, Philips hiked its 2021 revenue guidance to now expect “low-to-mid-single-digit comparable sales growth.”

Technical analysis: Shares dip on a provision hit

Philips stock price fell almost 4% today to trade below the €50 mark once again after the company reported a €250 million hit to its income. Given the fact that shares of Philips were trading near the record highs, the risk/reward for the stock was tilted to the downside. 

Shares have therefore slipped to hit €48.00, which marks the 4-week low. A move lower stopped at the level that hosts the previous record high, set in February. A further push lower is likely to take the price action to the 100-DMA that trades now at €46.41.

Summary

Philips stock price fell almost 4% today to hit 4-week lows after the company said it took a €250 million hit to its income. Other than that, the company reported very strong sales growth for its first quarter.