Philips' first-quarter earnings came in weaker than forecast Monday morning, but the analysts are hanging on to their "buy" ratings.

The stock is down more than 20 percent year-to-date and has underperformed the Dow Jones STOXX 50, and the analysts are standing fast. Lighting and consumer electronics are vulnerable to recessions and still the analysts are hanging on to their "buys."

The stock opened at the bottom of the AEX despite the upbeat comments from the chief financial officer, Pierre-Jean Sivignon, who was on "Squawk Box Europe" as the numbers were released.

The company revised up its "Vision 2010" targets, which was a big positive. These are an important set of "reach" goals that are part of the company’s structural changes designed to refocus on unit profitability. That is all for the good. But the program of disposals have seduced the analyst community into viewing Philips as a young race horse in training rather than a middle-aged nag, enjoying a second wind.

The analysts argue the current share price doesn’t reflect the strength of the company. Marcel Achterberg, at ING Wholesale Banking, is a case in point. He is sticking with a "buy" after this morning's numbers. They point to the three core businesses: domestic appliances and personal care, lighting, and health care, which have performed strongly. As these operations contribute 95% of the total operating value its important they meet expectations.

In the near term the TV operations are weak, but the analysts say the company is dealing with that by getting out of the U.S. business, which should positively impact results from the end of 2008. So the story is one of "jam tomorrow" as Lewis Carroll would say.

And that is the problem with following the guidance on Philips.

Earnings expectations for this quarter were higher than achieved because the analysts are excited about the restructuring. Philips' share price has not been able to buck the weaker market tone. But the analysts have been reluctant to acknowledge the company is vulnerable to a fall in market levels.

Where were the warnings and the advice about taking a shorter-term trading "sell"? Where were the notes reducing short-term targets?

There are also a number of longer-term issues that could challenge growth assumptions. Health care has been flagged as one of the strongest divisions and has delivered, but will curbs on U.S. medical spending post-election hurt the outlook in this unit? The analysts also appear to have been slow pricing in the worst-case recession scenario.

A seasoned fund manager once suggested to me that Philips rarely misses an opportunity to disappoint the market. I hope the analysts' calls on the prospects for Philips turn out to be true –- but the numbers announced this morning still leave some room for doubt. 

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