Smith & Nephew plc (GB:SN)
LSE:SN
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Smith & Nephew
(LSE:SN)
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Rating:70Outperform
Price Target:
1,225.00 p
▼(-3.39% Downside)
Action:ReiteratedDate: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
Improving cash generation
Material FCF and operating cash flow improvement in 2024–25 strengthens the firm's ability to fund R&D, buybacks, dividends and M&A without excessive leverage. Durable cash conversion supports reinvestment in launches and provides financial flexibility over the next 2–6 months.
Negative Factors
China VBP profit pressure
Volume-based procurement in China structurally pressures pricing and margins in that market. Even as China is a modest share of sales, persistent procurement reform reduces profit contribution and adds regulatory earnings uncertainty in emerging markets over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Improving cash generation
Material FCF and operating cash flow improvement in 2024–25 strengthens the firm's ability to fund R&D, buybacks, dividends and M&A without excessive leverage. Durable cash conversion supports reinvestment in launches and provides financial flexibility over the next 2–6 months.
Read all positive factors
Smith & Nephew (SN) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£9.51B
Dividend Yield2.35%
Average Volume (3M)3.93M
Price to Earnings (P/E)10.5
Beta (1Y)1.08
Revenue Growth2.84%
EPS Growth47.82%
CountryUK
Employees17,349
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)0.74
Shares Outstanding854,049,130
10 Day Avg. Volume2,834,900
30 Day Avg. Volume3,927,868
Financial Highlights & Ratios
PEG Ratio0.39
Price to Book (P/B)2.73
Price to Sales (P/S)2.30
P/FCF Ratio16.61
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,276.00Price Target Upside0.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
EPS Forecast (FY)1.11
Revenue Forecast (FY)£6.59B
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; ...
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:...
Smith & Nephew Earnings Call Summary
Earnings Call Date:Mar 02, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call presented a largely positive operational and financial update: the company delivered mid-single-digit organic growth, 160 bps of margin expansion, strong free cash flow (+52.5% to $840m), record CORI placements and broad-based product-driven growth with over 60% of growth from recent launches. Management also set constructive 2026 guidance (≈6% organic revenue growth and ≈8% trading profit growth) and reiterated multi-year RISE targets. Notable near-term challenges include China VBP impacts (now smaller but still affecting profit), CMS-driven reimbursement changes for skin substitutes with an estimated $20m–$40m profit headwind, a $159m inventory write-down from portfolio rationalization, higher tariffs (~$60m impact), and expected modest dilution from the Integrity acquisition in 2026. Overall, positives around cash generation, margin expansion, product adoption and disciplined cost savings materially outweigh the manageable and disclosed headwinds.Positive Updates
Full-Year Revenue Growth and Broad-Based Unit Growth
Fiscal 2025 underlying revenue growth of 5.3% (reported +6.1%); all three business units grew >5% (Orthopaedics +5.1% underlying, Sports Medicine & ENT +5.2% underlying, Advanced Wound Management +5.6% underlying). Excluding China, underlying group growth would have been ~7%.
Negative Updates
China VBP Headwinds
China Volume-Based Procurement (VBP) created a headwind that peaked at ~170 basis points in 2025; China represented just over 2% of group sales and will remain a modest headwind to profit in 2026 (company expects a $15m–$20m reduction in China profit for 2026).
Read all updates
Q4-2025 Updates
Positive
Negative
Full-Year Revenue Growth and Broad-Based Unit Growth
Fiscal 2025 underlying revenue growth of 5.3% (reported +6.1%); all three business units grew >5% (Orthopaedics +5.1% underlying, Sports Medicine & ENT +5.2% underlying, Advanced Wound Management +5.6% underlying). Excluding China, underlying group growth would have been ~7%.
Read all positive updates
Company Guidance
Guidance for 2026 reiterated organic revenue growth of around 6% and trading profit growth of about 8% (organic), with trading profit expected to be around $1.3 billion including the Integrity Orthopaedics acquisition (consideration up to $450m; dilutive in 2026, broadly neutral in 2027 and accretive in 2028). Free cash flow is guided to be about $800 million (versus $840m in 2025), ROIC >10% excluding Integrity, and the business targets ~$150 million of savings in 2026 (half from the 12‑Point Plan/ZBB and half from other opportunities). Known headwinds for 2026 include ~$60 million of tariffs, $20–40 million incremental impact from wound reimbursement changes, and a $15–20 million profit hit from China VBP; management expects profit growth to be weighted to the second half (H1 revenue ~4.5–5% and H2 ~7.5–8%; H1 profit growth ~5.5–6% and H2 ~9–10%). Mid‑term RISE targets reiterated: organic revenue CAGR 6–7%, trading profit CAGR 9–10%, >$1 billion FCF in 2028 and 12–13% ROIC.Smith & Nephew Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
71
Positive
Cash Flow
70
Positive
| 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
Positive
1268.00
Price Trends
1253.02
Positive
1235.51
Positive
1255.79
Positive
Market Momentum
5.77
Negative
60.04
Neutral
78.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SN, the sentiment is Positive. The current price of 1268 is above the 20-day moving average (MA) of 1214.02, above the 50-day MA of 1253.02, and above the 200-day MA of 1255.79, indicating a bullish trend. The MACD of 5.77 indicates Negative momentum. The RSI at 60.04 is Neutral, neither overbought nor oversold. The STOCH value of 78.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SN.
Smith & Nephew Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | £9.51B | 10.55 | 11.79% | 2.35% | 2.84% | 47.82% | |
67 Neutral | £4.07B | 22.69 | 10.53% | 2.11% | 3.29% | -10.58% | |
59 Neutral | £3.03B | 6.96 | 15.83% | 4.16% | 3.84% | 8.83% | |
58 Neutral | £536.68M | 31.50 | 3.87% | 1.25% | 28.96% | 39.58% | |
55 Neutral | £635.75M | 16.90 | 2.22% | 1.37% | 4.54% | -34.92% | |
53 Neutral | £311.58M | -1.55 | -31.83% | ― | -5.89% | -310.69% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
GB:SN
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1,114.00
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.