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4-Traders Homepage  >  Equities  >  London Stock Exchange  >  Smith & Nephew    SN.   GB0009223206

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Smith & Nephew : Under pressure Smith & Nephew to focus on efficiency

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11/03/2017 | 11:51am CET

Smith & Nephew (>> Smith & Nephew) said no major surgery is required for the artificial knee and hip maker to deliver shareholder value, even as it reported lacklustre sales that increase pressure on the company reportedly being stalked by activist investor Elliott.

Smith & Nephew (>> Smith & Nephew) said no major surgery is required for the artificial knee and hip maker to deliver shareholder value, even as it reported lacklustre sales that increase pressure on the company reportedly being stalked by activist investor Elliott.

Two reports last month said that Paul Singer's U.S. hedge fund had taken a stake in Smith & Nephew, reigniting perennial speculation that it could be acquired by a U.S. rival such as Stryker (>> Stryker Corporation) or be broken up.

But Chief Executive Olivier Bohuon, whose plan to retire by the end of 2018 has fuelled the uncertainty, focused on fresh efforts to boost efficiency rather than any big deals.

"We are not thinking about asset disposal at this stage at all," he said after the trading update, adding that the company would concentrate on simplifying manufacturing, warehouse and distribution operations.

He remained tight-lipped when asked about Elliott.

"We do not comment on rumour or speculation and we don't comment on the identity of our investors unless required to do so under disclosure rules," he said.

The British company, which also has wound-care and sports medicine units, reported 3 percent revenue growth for the quarter, just shy of market forecasts, and nudged down its full-year guidance for revenue and trading margin growth to the lower end of its 3-4 percent and 20-70 basis point ranges.

'NOTHING STELLAR'

Berenberg analysts said the numbers were "nothing stellar" and largely in line with fairly low expectations.

Further detail on Bohuon's latest efficiency drive will be provided at the full-year results in February, he said.

Shares in the company hit a record high of 14.42 pounds last month and were up 0.8 percent at 13.94 pounds at 1038 GMT on Friday.

Berenberg, which has a hold rating on the stock, said the efficiency programme is unlikely to be a game changer.

"For the last decade the company has more or less been permanently engaged in such a programme and while we do believe that on each occasion the company achieved its cost-saving goals, margins and profit growth have not lived up to investor expectations," the broker said.

Smith & Nephew made revenue of $1.15 billion (£880 million) in the quarter, up 3 percent, against analyst expectations of about $1.16 billion.

Bohuon said market-beating growth from its knee implants and a recovery in emerging markets helped the company to meet the lower end of its growth target in the quarter.

Recent hurricanes in the United States, Mexico and Puerto Rico had about a $5 million impact, he added.

(Editing by David Goodman)

By Paul Sandle

Stocks treated in this article : Stryker Corporation, Smith & Nephew
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Financials ($)
Sales 2017 4 786 M
EBIT 2017 978 M
Net income 2017 655 M
Debt 2017 1 193 M
Yield 2017 1,89%
P/E ratio 2017 22,88
P/E ratio 2018 21,38
EV / Sales 2017 3,45x
EV / Sales 2018 3,22x
Capitalization 15 313 M
Chart SMITH & NEPHEW
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Smith & Nephew Technical Analysis Chart | SN. | GB0009223206 | 4-Traders
Technical analysis trends SMITH & NEPHEW
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TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 17
Average target price 18,0 $
Spread / Average Target 2,9%
EPS Revisions
Managers
NameTitle
Olivier Jean Bohuon Chief Executive Officer & Director
Roberto Quarta Chairman
Matthew R. Stober President-Global Operations
Graham Baker Chief Financial Officer & Director
Vasant Padmanabhan President-Research & Development
Sector and Competitors
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GLAUKOS CORP-22.89%936
OSSTEM IMPLANT CO LTD--.--%830