What happened

Shares of Koninklijke Philips (NYSE:PHG) fell 18.2% lower in October 2018, according to data from S&P Global Market Intelligence. The Dutch maker of consumer electronics and medical devices shares its third-quarter results last month, falling short of analyst views in a couple of important ways.

So what

On Oct. 22, Philips announced that its third-quarter sales rose 3.8% year over year on 4% stronger comparable sales, landing at $4.94 billion. European analysts had been looking for slightly stronger revenue and 5.4% higher comps. On the bottom line, earnings fell 6% to $0.35 per share. Adjusted EBITDA profits rose 9% to $651 million, but analysts were expecting something closer to $670 million. Philips shares fell 11.5% over the next two days.

A doctor is reading a medical scan film in front of an MRI machine.

Image source: Getty Images.

Now what

So the third quarter was a bit slow, but Philips' management didn't reduce full-year revenue and profit targets. In my eyes, that looks as if the company's leaders see an upturn in the quarter. Analysts at Deutsche Bank agree, calling Philips a "catalyst buy" two days after the modest earnings report. A temporary slowdown in personal health products looks like a mere speed bump as the company continues to experience fantastic growth in the diagnosis and treatment division.

All told, Philips shares seem to be poised for a quick turnaround when the fourth-quarter results are revealed. Otherwise, the management team needs to work on its short-term financial forecasting skills.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.