The company expects fourth-quarter core profit to drop 40%
The shares of Koninklijke Philips NV (NYSE:PHG) are plummeting today, down 14.9% to trade at $32.97, after the medical equipment company issued a profit warning, saying it expected fourth-quarter core profit to drop nearly 40% amid supply issues. Plus, the recall of its ventilators has made many investors wary, and today the company increased the size of a provision for recall costs by 225 million euros to 725 million euros.
Today's negative price action has PHG trading at annual lows, and dropping below the $34 level, which provided a floor through most of December. The stock is now below all short- and long-term moving averages. Plus, this short-term fall could've already been in the cards, too, per the equity's Relative Strength Index (RSI) of 81, which sits in "overbought" territory.
Of the four analysts in coverage, three carry a tepid "hold" rating, with one "strong buy." Should PHG stage a rebound, the stock could see tailwinds from a shift in sentiment.
It's also worth noting that the security has landed on the Short Sale Restricted (SSR) list. Meanwhile, the stock's typically quiet options pits are seeing an unusually high amount of activity, with options volume running at 24 times the intraday average. The January 35 call is the most popular, followed by the 40 call in the same monthly series.