The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
There is value to be had for brave investors.
By Rosie Murray-west
An ageing population and a hip and knee replacement company ought to be a match made in heaven. So why have Smith & Nephew (S&N) investors had such a hellish time?
The shares are down 38 per cent over the past five years and nearly 6 per cent since the beginning of 2024.
There are myriad reasons for this. These range from a well-publicised (but now resolved) revolt over new chief executive Deepak Nath's whopping £9.5 million pay packet to fears that the popularity of weight-loss drugs, such as Ozempic, may mean fewer of us rely on knee replacements.
What investors need to decide is whether pessimism over S&N's future has been overdone and if Nath's much-vaunted 12-point-plan will deliver a recovery that will produce a meaningful uplift in the shares.
First, let's look at what went wrong. S&N has three main divisions: orthopaedics, sports medicine and advanced wound management. Before Covid, the company had operating margins of more than 20 per cent, but this collapsed after the pandemic with the company struggling with supply chains and inflation, particularly in orthopaedics.
Nath joined in April 2022 and rolled out a new plan to fix the orthopaedics division with improved inventory management and training, while growing the other two divisions.
The first quarter trading update last week showed that much of this plan is on track. Orthopaedics is growing outside the US, while sports medicine and advanced wound management are performing to expectations.
On the other hand, the company is suffering from China's new Volume Based Procurement strategy, which forces huge price reductions on to manufacturers. This is affecting its sports medicine division while struggles remain with its market share in the US for hips and knees. Analysts broadly welcomed the figures, even though they slightly missed some forecasts for the first quarter.
Seb Jantet, healthcare analyst at Liberum, says the US is still battling with supply issues for hips and knees, but there is potential for upside if the business resolves this.
He adds that Volume Based Procurement will drag down revenues for sports medicine and joint repair by 5 per cent.
Jantet predicts 5 per cent underlying growth for the full year and believes the company is undervalued.
'The shares haven't performed well since February and it isn't entirely clear why,' he says.
Julien Dormois, at broker Jeffries, agrees that the current weak share price is an opportunity.
'Smith & Nephew is reaping the benefits from portfolio shifting toward faster-growth segments and recent R&D efforts, which support higher, sustainable growth,' he says.
'We think the lacklustre stock performance allows investors to revisit the case.'
There are headwinds, though, including the issues in China and the possibility that the company may not hit its ambitious targets.
But these should not detract from the fact that the shares are attractively priced.
S&N is paying
Https://www.thisismoney.co.uk/money/investing/article-13406885/MIDAS-SHARE-TIPS-soon-wont-hip-cold-shoulder-Smith-Nephew.html?ico=mol_desktop_money-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Findex.html&_gl=1*e6wkdb*_ga*ODI5NDY2MDg4LjE2NzkxNzI1NjM.*_ga_XE0XLFFF16*MTcxNTQ2MTIyOC45My4xLjE3MTU0NjI1MzAuMC4wLjA.*_ga_GQE6MT7DLZ*MTcxNTQ2MTIyNy40LjEuMTcxNTQ2MjUzMC4wLjAuMA..&_ga=2.173914400.2030337593.1715461228-829466088.1679172563
Not that long ago you were waiting to go all in at £9.00, what’s happened, change of heart or maybe a bit of short talking?
Still £2.55 higher - when will the penny drop with investors ?
Jefferies cuts Smith & Nephew price target to 1,250 (1,300) pence - 'buy'
The Americans JPM raise target price to 1,381
Barclays cuts Smith & Nephew price target to 1,190 (1,200) pence - 'equal weight'
Was a close run thing.
Shareholders are quite rightly unhappy with the performance here and the buck stops at the top. What's going on in the US?
Trimmed around 1015/1018 and rebought around 971/2. A salary for many so worth a trade.
Usual corrupt BS!
On the back of CVS Healthcare miss ?
Lol haha adding back
Makes a change - progress and consolidation - market seems to like it without the usual sell off. Undervalued stock, unloved.
Nothing startling in trading statement.
How is a P/E of 14 for this sort of company overpriced? When peers trade at 30x?
Smith and Nephew has always been way overpriced. Even at the current level still seems overpriced. The dividend payout is below what you get from a savings account and the prospect for growth is just about ...meh, especially now and the slowing Chinese market. The share price should be half as much to yield a healthy dividend of 5-6%.
I would buy only with the wish of seeing the share price back to historical levels but I can't put any weight behind my wish especially with the debt it carries and the rates.
Anyone going?
Need some fireworks.
Joined the top-up club at 962 today. I don't know why...
We’ve all been asking that for years! Too long really and I would not normally invest in the hope of a takeover - but I topped up again today. This is like crack - it’s wrong, i don’t like it, and it’s probably going to be economically damaging for me - but I just can’t stop!
- is someone not bidding for this company?
Great headline, I hope all will be voting against giving our chief exec Deepak Nath a pay rise for his appalling service
“SN. will be over £18 within the next 6 to 9 months”
So the sp is going to double by the end of the year?
Great if it does. Doesn’t feel like it given the reaction the last statement (“I must remain patient”, I tell myself)
On what basis do you say this exactly?
The plan is working? Just needs time…?
Reading charts?
LMAO
So what does the chart says to you dummy?
You are one of the most clueless dummy I ever come across on these boards.
A person who post a mobile phone number for customer relation contact number for FTSE100 company must be totally clueless !lol
Pack up your garbage and do some study to educate yourself rather than throwing your dummy all over the place.
time for your lithium and quetiapine now.
lloyds above 100p by year end 😄 😄
bat **** crazy.