GCIBerenberg lowers Smtih and Nephew to 'hold'
Analysts at Berenberg downgraded medical equipment manufacturing company from 'buy' to 'hold' and lowered its target price on the stock from £14.50 to £10.50, stating the group's path to recovery was now "less clear".
Berenberg said Smith & Nephew released "a disappointing Q3 trading report" last week, which revealed that growth in its US orthopaedics business still lagged peers despite showing signs of improvement and that headwinds in China had led to guidance downgrades for 2024 and 2025.
"Given these challenges, we are uncertain about whether we will see a significant improvement in the company's financials over the next 12 months," said the German bank. "More than two years into the company's turnaround plan, the slow pace of recovery somewhat calls into question the level of improvement we can expect from management's 12-point plan in the medium term."
Berenberg added that while S&N's shares were "clearly cheap", they trade broadly in line with the bottom end of its orthopaedics peer group on a 9x 2025 enterprise value/underlying earnings ratio.
"This seems fair, in our view, given the current uncertainties," concluded the analysts.
Reporting by Iain Gilbert at Sharecast.com
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.