Smiths Group plc: Solid Growth Amid Divestment Plans and Operational Challenges Justifies Hold Rating

In a report released today, Andrew Douglas from Jefferies maintained a Hold rating on Smiths Group plc (SMIN – Research Report), with a price target of p1,930.00.

Andrew Douglas has given his Hold rating due to a combination of factors influencing Smiths Group plc’s performance. The company has reported a solid trading update with a notable 10.6% organic constant currency growth in the third quarter. However, this growth is primarily driven by the Detection and Interconnect divisions, which Smiths is planning to divest. While the Flex-Tek division also showed high single-digit growth, there is still a lack of operational leverage that management needs to address.
Additionally, the company’s response to tariffs is considered robust and aligns with the sector, though the indirect impacts remain uncertain. Management’s guidance suggests that organic constant currency sales will reach the upper end of their 6-8% range, which aligns with market consensus. Despite the positive sales momentum and a strong order book, particularly in the John Crane division, the overall outlook remains cautious, justifying the Hold rating.