SNN Stock Forecast & Price Target

Smith & Nephew has demonstrated resilient financial performance, achieving a +5.3% underlying growth in its latest results, bolstered by significant contributions from its orthopedic segment and innovative technologies like CORI, which surpassed expectations with a 23.9% underlying growth. The company's strong outlook for the second half of the year indicates a recovery from first-half headwinds, with anticipated growth driven by operational improvements and higher trading profit margins projected between 19.0% and 20.0%. Furthermore, the majority of Smith & Nephew's revenue, over half, stems from the robust U.S. market, which continues to show positive traction in key product categories, reinforcing a favorable financial trajectory.

Smith & Nephew's revenue outlook for FY25 is unfavorable, as guidance indicates a weaker performance in Q1, influenced by fewer selling days, ongoing distributor inventory adjustments in China, and anticipated revenue impacts from Value-Based Purchasing (VBP) initiatives. Despite some improvement in return on invested capital (ROIC) within the orthopedic segment, it remains significantly lower than that of the company's other segments, highlighting potential inefficiencies. Additionally, the evolving U.S. healthcare landscape poses a risk to the company's financial stability due to possible decreases in reimbursement rates, compounded by persistent political and regulatory challenges in emerging markets, particularly China.