Thursday, April 21, 2011

Koninklijke Philips Electronics (NYSE: PHG) Q2 2011 Price Target

Recent price: 29.62$
P/E Ratio: 13.50
3 Months Target Price: 33$

Company Description
Data provided by Reuters tells us that Koninklijke Philips Electronics (Royal Philips Electronics) is the parent company of the Philips Group. Philips’ activities in the field of health and well-being are organized on a sector basis, which includes Healthcare, Consumer Lifestyle and Lighting. The Group Management & Services sector provides the operating sectors with support through shared service centers. As of December 31, 2010 Philips had 118 production sites in 27 countries, sales and service outlets in approximately 100 countries.

Confidence Margins
Strong resistance $34.27(+16%)
Light resistance $32.55 (+13%)
Light support $29.02 (-2%)
Strong support $26.81 (-9%)

The Koninklijke Philips Electronics conglomerate saw it's shares plunge after reporting first quarter financials that were very disappointing. Most of the losses were due to the TV unit. The company plans to sell the unit to raise cash for more profitable operations and this will prove to be beneficial for shareholders opening a long position now.

Entry strategy
For the cautious investor:
Buy the stock for 30$ or less.

For the risk-taking trader:
The July 2011 30$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 175$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 33$, or keep it until 34$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 33$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

No comments:

Post a Comment