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Philips’ (NYSE:PHG) decision to halt sales of its respiratory care devices in the U.S. to meet regulatory requirements is likely favorable to its rival, ResMed (NYSE:RMD), Citi argued on Monday as the Dutch medical device maker reacts to a major product recall.
Philips (PHG) ADRs lost ~6%, marking the biggest intraday decline since October, while San Diego, California-based ResMed (RMD) traded higher for the third straight session in reaction to the news. Inspire Medical Systems (INSP) and Owens & Minor (OMI) also operate in the respiratory care device market in the U.S.
The decision to halt sales came after the company agreed to a consent decree that the U.S. Department of Justice laid out on behalf of the FDA in response to its 2021 recall of sleep apnea and ventilator machines over potential health risks.
With details about the agreement remaining unclear amid a pending court decision on its approval, Citi argues there is no clarity over how long the sales halt will last. However, analyst Mathieu Chevrier, with a Buy rating on RMD, expects Philips (PHG) to resume U.S. market operations from July 1.
