One Health Care Equipment Company: Smith & Nephew Plc (SN)

London-based Smith & Nephew Plc is engaged in the business of manufacturing and distribution of healthcare devices for application in orthopaedic reconstruction and trauma, sports medicine and advanced wound management. The key offerings of the group are hip and knee implants, products for correcting bone deformities and stabilize chronic fractures.

A leading position helps the company to increase its visibility and maintain its competitive position. The group has been a global medical technology company since the last 160 years. A strong market position would increase the confidence of customers in the company's products and establish its brand image, which makes it easier to introduce new products.

The company is an industry leader in hip & knee implants, sports medicine and advanced wound management markets.

The group has implemented certain strategic acquisitions intending to enhance its business operation. In April 2019, the group has completed the acquisition of Leaf Healthcare Inc, a Pleasanton-based software publisher for an undisclosed amount. In March 2019, the group completed 100 per cent acquisition of the Osiris Therapeutics Inc, a Columbia based manufacturer of biological for a total consideration of around US$ 660mn.

However, the group signalled more acquisitions after reporting first-quarter revenue. Namal Nawana, CEO at Smith & Nephew, said that Merger & Acquisition is imperative for us, historically the group wasn't doing enough in my opinion, he added.

During the first quarter, the group reported growth in all of its business segment, comprised of orthopaedic reconstruction, sports medicine and wound care. In Q1 FY19, the company’s revenue stood at $1,202 mn and growth was accelerated and delivered ahead of FY18, mainly driven by reaping the benefits from new commercial model of the company. The company in its FY19 guidance updated that the underlying revenue growth will be accounted in the upper half of the guidance range in between 2.5 per cent to 3.5 per cent. Also, the trading profit margin as expected remained unchanged between 22.8 per cent to 23.2 per cent.

Stock Performance – 1 Year

At the time of writing (as on May 09, 2019 at 09:08 AM GMT), the shares of Smith & Nephew were quoting at GBX 1,590.50 and added 14.5 points or 0.92 per cent against the previous day close price. During the past one year, shares have registered a 52w high of GBX 1,609.20 and a 52w low of GBX 1,242.50, and at the current market price, as quoted in the price chart, shares were trading around 28 per cent above the 52w low price level. On a yearly basis, the stock has delivered a price return of 20.81 per cent.

From the simple moving average standpoint, shares were trading above the 30-day, 60-day and 200-day simple moving average, a technical indicator that indicates the stock is in long-term uptrend rally and having potential to move up further from the current trading levels.

Group’s outstanding market capitalization stood at around £14.03 bn with a dividend yield of 1.76 per cent.