Credit Suisse and Barclays lower target price on Smith&Nephew
By Alexander Bueso
Date: Thursday 04 Aug 2022
(Sharecast News) - Analysts at Credit Suisse lowered their target price for shares of Smith&Nephew after what they described as a "mixed" set of interim results.
On the back of the medical device maker's lower projections for organic growth and foreign exchange headwinds in the form of a weaker euro, they trimmed their 2022-24 sales forecasts by 3% and cut their earnings per share estimates to reflect higher cost inflation.
Marking to market for a weaker pound and rolling forward their discounted cash flow estimates also led them to reduce their target price from 1,540.0p to 1,400.0p.
"While we see Smith & Nephew stock as materially undervalued and thus are positive, we acknowledge that the business is under material margin pressure, especially in an inflationary environment given limited room to absorb this," they added.
The analysts did however stick with their 'outperform' recommendation on the shares.
On a similar note, analysts at Barclays said investors were sceptical of the manufacturer's medium-term guidance for margins with the 21% guidance for 2024 looking like a "stretch".
But the consensus was just as sceptical, they said.
"With expectations in a better place and durable demand medium term, we see value in the shares."
Barclays also kept its 'overweight' recommendation but, likewise, lowered its target price from 1,630.0p to 1,530.0p.
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