Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £10.19B
• Dividend Yield: 2.35%
• Average Volume (3M): 3.93M
• Price to Earnings (P/E): 22.6
• Beta (1Y): 1.00
• Revenue Growth: 2.51%
• EPS Growth: 56.56%
• Country: UK
• Employees: 17,349
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 0.44
• Shares Outstanding: 849,889,300
• 10 Day Avg. Volume: 2,834,900
• 30 Day Avg. Volume: 3,927,868
• PEG Ratio: 0.39
• Price to Book (P/B): 2.73
• Price to Sales (P/S): 2.30
• P/FCF Ratio: 16.61
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: £1,460.57
• Price Target Upside: 21.66% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 1.12
• Revenue Forecast (FY): £6.58B

• Rating: 70 Outperform
• Price Target: 1,321.00 p ▲(10.04% Upside)
• Action: Reiterated Date: 03/04/26
• Date: Action: Reiterated 03/04/26

The score is driven primarily by improving financial performance (better growth, margins, and cash flow) and supportive technical momentum (price above key moving averages with positive MACD). These positives are tempered by a relatively high P/E valuation and earnings-call-flagged near-term profit headwinds (tariffs, reimbursement and China impacts, and acquisition dilution).

Positive Factors

Revenue Re-acceleration

Sustained underlying revenue re-acceleration across 2025 indicates broad-based demand recovery rather than a one-off. Multi-segment growth (>5% in each unit) supports durable procedure-driven sales and gives credibility to the company’s mid-term organic growth targets, underpinning predictable cash generation over 2–6 months.

Margin Expansion & Profitability

Meaningful margin expansion reflects operating leverage and realized cost savings, which materially improve sustainable earnings power. Combined with targeted efficiency savings and higher gross margins, this supports stronger operating cash flow and capacity for reinvestment and shareholder returns over the medium term.

Innovation-led Product Momentum

High contribution from recent launches demonstrates an effective R&D and commercialization engine that drives durable share gains and recurring consumable sales. Ongoing new-product cadence and strong CORI adoption expand addressable markets and support sustainable multi-year revenue and margin improvement.

Negative Factors

U.S. Reimbursement Headwinds

Structural reimbursement changes directly reduce reimbursement levels and physician-office demand for skin-substitute products, shrinking a recurring consumables revenue stream. This creates persistent profit pressure in Advanced Wound Management unless offset by pricing, mix-shift, or product redesign, impacting margins and cash flow sustainability.

China VBP Pricing Pressure

China VBP is a structural procurement policy that compresses prices and margins in that market. Even at a modest sales share, sustained lower pricing undermines regional profitability and necessitates strategic adjustments (product mix, cost base, or channel strategy) to preserve group margins over the medium term.

Portfolio Rationalization & Acquisition Costs

A material inventory write-down and ongoing restructuring reflect execution and portfolio churn that reduce near-term earnings quality and cash conversion. Combined with acquisition-related dilution and integration costs, these items can suppress ROIC and free cash flow until synergies and SKU simplification fully realize, creating medium-term performance risk.

Smith & Nephew Business Overview & Revenue Model

Company Description

Smith & Nephew plc, together with its subsidiaries, develops, manufactures, markets, and sells medical devices worldwide. The company offers knee implant products for knee replacement procedures; hip implants for the reconstruction of hip joints; and trauma and extremities products that include internal and external devices used in the stabilization of severe fractures and deformity correction procedures. It also provides sports medicine joint repair products for surgeons, including instruments, technologies, and implants necessary to perform minimally invasive surgery of the joints, such as the repair of soft tissue injuries and degenerative conditions of the knee, hip, and shoulder, as well as meniscal repair systems. In addition, the company offers arthroscopic enabling technologies comprising fluid management equipment for surgical access, high-definition cameras, digital image capture, scopes, light sources, and monitors to assist with visualization inside the joints, radio frequency, electromechanical and mechanical tissue resection devices, and hand instruments for removing damaged tissue; and ear, nose, and throat solutions. Further, it provides advanced wound care products for the treatment and prevention of acute and chronic wounds, which comprise leg, diabetic and pressure ulcers, burns, and post-operative wounds; advanced wound bioactives, including biologics and other bioactive technologies for debridement and dermal repair/regeneration, as well as regenerative medicine products including skin, bone graft, and articular cartilage substitutes; and advanced wound devices, such as traditional and single-use negative pressure wound therapy, and hydrosurgery systems. It primarily serves the healthcare providers. Smith & Nephew plc was founded in 1856 and is headquartered in Watford, the United Kingdom.

How the Company Makes Money

Smith & Nephew primarily makes money by selling medical devices and consumable healthcare products to hospitals and other care settings through a mix of direct sales forces and distributors. Key revenue streams typically include: (1) Orthopaedics: revenue from implantable devices (e.g., hip and knee reconstruction systems, trauma fixation) and associated surgical instruments and enabling technologies; implants generate per-procedure sales and are supported by recurring demand tied to surgical volumes. (2) Sports Medicine & ENT: revenue from arthroscopy and soft-tissue repair solutions (e.g., fixation/repair devices) and related capital equipment used in minimally invasive procedures; this category often blends recurring single-use/disposable items used per case with sales of higher-priced durable systems. (3) Advanced Wound Management: revenue from wound care consumables (dressings, biologic/advanced wound products) and therapy systems such as negative pressure wound therapy, where earnings are driven by ongoing replenishment of disposable components and dressings and, where applicable, rental or sale of therapy devices. Additional factors affecting earnings include pricing and reimbursement dynamics in healthcare markets, procedure volumes, product mix (implants vs. consumables vs. capital equipment), geographic expansion, and long-term relationships with hospital systems and surgical centers; specific partnership details are null.

Smith & Nephew Financial Statement Overview

Summary

Financials are improving: revenue growth re-accelerated and profitability stepped up in 2025 (EBIT and net margins higher), with a strong rebound in operating and free cash flow. Balance sheet leverage appears manageable and stable, but multi-year inconsistency in margins/returns and only moderate cash conversion keep the score below top-tier.

Income Statement

Revenue growth has re-accelerated, improving from ~0% in 2022 to 6.4% in 2023 and 5.4% in 2025. Profitability has also strengthened meaningfully versus 2022–2024, with 2025 EBIT margin at ~16.3% and net margin at ~10.1% (up from ~11.3% and ~7.1% in 2024). A key watch-out is margin volatility over the period (notably weaker results in 2022–2023 versus 2021), suggesting earnings power is improving but not yet fully consistent.

Balance Sheet

Leverage looks manageable for the sector, with debt-to-equity broadly stable around ~0.63 in 2024–2025 (and ~0.55–0.70 range over 2020–2025). Equity is sizable (~5.29B in 2025) and assets have been steady (~10.46B in 2025), supporting balance sheet resilience. Return on equity has improved to ~12.1% in 2025 from ~7.8% in 2024, but the multi-year trend has been uneven (mid-single digits in 2022–2023), which is the main balance-sheet-related quality concern.

Cash Flow

Cash generation has improved materially, with operating cash flow rising to ~1.31B in 2025 from ~0.99B in 2024 and ~0.61B in 2023, and free cash flow increasing to ~0.87B in 2025. Free cash flow has grown strongly in the last two years (2024–2025), supporting reinvestment capacity and shareholder flexibility. The main weakness is that cash conversion is not consistently high: free cash flow is ~66% of net income in 2025, and operating cash flow relative to EBITDA is below 1x (improving, but still not particularly strong), indicating working-capital or cash cost headwinds at times.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	6.29B	5.81B	5.55B	5.21B	5.21B
Gross Profit	4.28B	4.05B	3.82B	3.67B	3.67B
EBITDA	1.61B	1.24B	956.00M	874.00M	1.24B
Net Income	638.11M	412.00M	263.00M	223.00M	524.00M
Balance Sheet
Total Assets	10.46B	10.35B	9.99B	9.97B	10.92B
Cash, Cash Equivalents and Short-Term Investments	557.20M	619.00M	302.00M	350.00M	1.29B
Total Debt	3.33B	3.32B	3.08B	2.87B	3.34B
Total Liabilities	5.17B	5.09B	4.77B	4.71B	5.35B
Stockholders Equity	5.29B	5.26B	5.22B	5.26B	5.57B
Cash Flow
Free Cash Flow	869.88M	606.00M	181.00M	110.00M	469.00M
Operating Cash Flow	1.31B	987.00M	608.00M	468.00M	877.00M
Investing Cash Flow	-414.52M	-569.00M	-448.00M	-472.00M	-691.00M
Financing Cash Flow	-975.04M	-86.00M	-200.00M	-926.00M	-645.00M

Smith & Nephew Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1200.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SN, the sentiment is Negative. The current price of 1200.5 is below the 20-day moving average (MA) of 1284.90, below the 50-day MA of 1270.62, and below the 200-day MA of 1261.50, indicating a bearish trend. The MACD of -20.06 indicates Positive momentum. The RSI at 34.39 is Neutral, neither overbought nor oversold. The STOCH value of 15.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:SN.

Smith & Nephew Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SN	70 Outperform	£10.19B	22.64	11.79%	2.35%	2.51%	56.56%
CTEC	67 Neutral	£4.27B	37.08	10.53%	2.11%	4.18%	37.65%
HIK	59 Neutral	£2.73B	11.21	15.83%	4.16%	3.73%	27.13%
AMS	56 Neutral	£419.80M	47.21	3.69%	1.25%	68.03%	-18.27%
PRTC	55 Neutral	£280.99M	-2.25	12.82%	―	1231.50%	―
SPI	54 Neutral	£764.51M	40.77	2.22%	1.37%	6.95%	-34.38%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%