Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £11.34B
• Dividend Yield: 2.35%
• Average Volume (3M): 3.93M
• Price to Earnings (P/E): 22.6
• Beta (1Y): 0.95
• 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: £1,499.86
• Price Target Upside: 12.26% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): 1.13
• Revenue Forecast (FY): £6.53B

• Rating: 70 Outperform
• Price Target: 1,496.00p ▲(11.98% 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

Improving cash generation

Material improvement in operating cash flow and free cash flow over 2024–2025 strengthens Smith & Nephew's durable financial flexibility. Higher cash generation funds R&D, product launches, dividends and buybacks, and provides a buffer against cyclical or regulatory shocks without relying on fresh debt.

Innovation-led product growth

A majority of growth driven by recent launches, plus plans to introduce 16 new products in 2026, indicate a sustainable organic growth engine. Persistent new-product adoption (eg CORI placements) supports market share gains, recurring revenue and margin resilience as innovations mature across ortho and wound segments.

Manageable leverage and improving returns

Moderate leverage with sizable equity and rising ROE provides capital structure flexibility for targeted M&A and reinvestment. Net leverage metrics and steady assets support balance-sheet resilience, enabling the company to pursue strategic initiatives while maintaining capacity for dividends and buybacks.

Negative Factors

CMS reimbursement changes (skin substitutes)

Regulatory reimbursement shifts for skin substitutes materially reduce revenue and profit for affected channels; these policy-driven changes are structural and can persist across the reimbursement cycle. Reduced physician-office volumes and pricing pressure weaken a once-stable revenue pool and hurt long-term margin visibility.

China VBP pricing pressure

Volume-based procurement in China imposed sustained margin pressure and a multi-year profit hit. While China is a small share of sales, VBP demonstrates how price-focused procurement can erode margins in emerging markets and create recurring downside to operating profit if adopted more broadly.

Inventory write-down and acquisition dilution

A large inventory write-down and near-term dilution from the Integrity acquisition increase execution and integration risk. These events reduce short-term ROIC and free cash flow, and require successful integration and restructuring to realize targeted savings and accretion over subsequent years.

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 generates revenue through the sale of medical devices and related services across its three main sectors. The company earns money primarily from the sale of advanced wound care products, orthopedic implants, and sports medicine solutions. Key revenue streams include direct product sales to hospitals, surgical facilities, and healthcare providers, as well as partnerships with distributors and medical professionals. Significant contracts with healthcare systems and innovative product launches also contribute to the company's earnings. Additionally, Smith & Nephew invests in research and development to create new technologies and improve existing products, which helps maintain a competitive edge and drives long-term growth.

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: Positive
• Last Price: 1336.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 1336 is above the 20-day moving average (MA) of 1320.05, above the 50-day MA of 1268.55, and above the 200-day MA of 1251.15, indicating a bullish trend. The MACD of 23.54 indicates Positive momentum. The RSI at 55.56 is Neutral, neither overbought nor oversold. The STOCH value of 51.27 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SN	70 Outperform	£11.34B	22.64	9.30%	2.35%	2.51%	56.56%
AMS	69 Neutral	£439.27M	19.10	3.66%	1.25%	68.03%	-18.27%
CTEC	67 Neutral	£4.63B	37.08	12.73%	2.11%	4.18%	37.65%
HIK	59 Neutral	£2.74B	11.21	15.66%	4.16%	3.73%	27.13%
PRTC	55 Neutral	£298.88M	-2.25	15.04%	―	1231.50%	―
SPI	55 Neutral	£782.21M	35.00	2.51%	1.37%	6.95%	-34.38%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%