Source: Sharecast
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