Philips' HealthSuite Insights To Boost Healthcare Sector

Koninklijke Philips N.V. (NYSE:PHG) recently unveiled the HealthSuite Insights, including the Insights Marketplace that would augment the adoption of analytics as well as artificial intelligence (AI) in major healthcare sector. In fact, Insights Marketplace will offer the first ecosystem for the healthcare industry, where curated Artificial Intelligence assets from the company and others will be available for license.

Notably, HealthSuite Insights supplements the work of data scientists, software developers, clinicians and healthcare providers by offering them access to advanced analytic capabilities. This, in turn, will help them to analyze healthcare data and provide them tools and technologies to maintain, build, deploy and scale AI-based solutions. The HealthSuite Insights platform facilitates the analytics solutions development, besides cutting down AI solutions’ development and total costs. Moreover, the platform will enable clinicians and healthcare providers to bring all the relevant patient information together. Further, the use of AI’s power will support precision diagnosis, personalized therapy and early intervention, thus leading to enhanced hospital efficiency.

Our Take

Philips is gradually emerging as a healthcare company. Per the company, increased spending on healthcare and fitness is likely to drive its future growth. Moving ahead, it believes that the recent product launches is likely to propel mid-to-high single-digit growth in Personal Health solutions. Meanwhile, the company remains optimistic about the prospects of its Diagnosis & Treatment vertical on account of positive industry trends. This is because Image-Guided Therapy and Ultrasound equipment sales are acting as major profit churners.

In a year’s time, shares of this Zacks Rank #3 (Hold) company have yielded a return of 24.6%, outperforming 16.4% growth recorded by the industry. Moreover, the company has been proactive in making acquisitions from time to time to strengthen its core business. For instance, Philips’s acquisition of the health technology behemoth — CardioProlific — would strengthen its pipeline of catheter-based therapy devices. We believe that steady traction of its offerings and the latest acquisitions might prove conducive to the top-line performance.

However, the company’s near-term profitability is likely to be hurt by the sluggish growth prospects of the healthcare market on a global scale. For instance, it expects the United States to witness low-single digit growth in the healthcare industry due to uncertainties like slowing government spending and events surrounding the ACA (Affordable Care Act) legislation. This apart, high restructuring and acquisition related costs as well as macroeconomic challenges in some of its key markets remain potent concerns in the quarters ahead.

Key Picks

Some better-ranked stocks from the same space are Aspen Technology, Inc. (NASDAQ:AZPN) , Arista Networks, Inc. (NYSE:ANET) and Kemet Corporation (NYSE:KEM) . While Aspen Technology sports a Zacks Rank #1 (Strong Buy), Arista Networks and Kemet carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aspen Technology has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 33.7%.

Arista Networks has outpaced estimates in the preceding four quarters, with an average earnings surprise of 25.3%.

Kemet has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 39.5%.

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