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Philips Buys Health & Parenting to Boost Parenting Platform

Koninklijke Philips N.V. PHG continued its impressive acquisition spree, as it announced the buyout of Health & Parenting Ltd — a London-based developer of healthcare and family-related mobile applications for expectant and new parents. Financial details of the transaction were kept under wraps.

Health & Parenting's applications will be integrated into Philips' uGrow digital parenting platform, and will serve to strengthen Philips’ offerings in pregnancy and parenting. The uGrow digital parenting platform captures data from connected devices, like Philips Avent smart baby monitor and Philips Avent smart ear thermometer, and offers personalized feedback and advice.

Philipshas been exceptionally active in the acquisition space, of late. After announcing the acquisition of Spectranetics Corporation SPNC earlier this week, the health technology behemoth revealed a deal to buy CardioProlific Inc. The Health & Parenting buyout marks Philips’ seventh acquisition this year. In addition to CardioProlific and Spectranetics, the company had earlier announced deals to acquire Electrical Geodesics, Respiratory Technologies, Respiratory Technologies, Inc. and Australian Pharmacy Sleep Services.

Philips has morphed from a lighting company into a healthcare technology provider, over the last couple of years, and it is leveraging bolt-on acquisitions to expand its footprint in this space. The company’s revenues have been encouraging in recent times, and these accretive acquisitions should lend solid momentum to the unit’s growth in the quarter to come. Also, Philips’ transformation from a hardware-oriented to a software-driven business, which is a higher-margin, recurring-revenue model, sits well with the investors.

This is reflected in the company’s stock movement in the recent past. Shares of the company have gained 18.8% in the last six months, outperforming the Zacks categorized Electronics Products-Miscellaneous industry’s average gain of 12.7%.

Also, the stock has been attracting positive analyst attention in recent weeks. Over the past 60 days, analysts have become bullish on the stock, with estimates moving north. With one upward revision compared with no downward revision over the past two months, the Zacks Consensus Estimate for fiscal 2017 earnings inched up from $1.56 to $1.60.

Koninklijke Philips N.V. Price and Consensus

 

Stocks to Consider

Some better-ranked stocks in the broader sector include Applied Materials, Inc. AMAT and Applied Optoelectronics, Inc. AAOI. While Applied Materials sports a Zacks Rank #1 (Strong Buy), Applied Optoelectronics carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With four back-to-back beats, Applied Materials has an average positive surprise of 3.4% for the trailing four quarters.

Applied Optoelectronics has a whopping average earnings surprise of 118.3% for the trailing four quarters, with three back-to-back beats.

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Applied Materials, Inc. (AMAT): Free Stock Analysis Report
 
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