Smith & Nephew Shares Continue Lower as Analysts React to Q3 Report

Smith & Nephew (LON: SN.) shares continued to edge lower Monday, currently down around 0.6% after plunging last week in reaction to its third-quarter trading report.

The stock plunged over 12% on Thursday following the report, with the company's update disappointing investors.

The company noted that China was impacted by worse-than-expected headwinds across its surgical businesses. As a result, for the full year 2024, the company cut its underlying revenue growth expectation to around 4.5%, down from the previous forecast of 5% to 6%.

“China VBP was a significant headwind that masked Sports Medicine's strong performance across the rest of the world,” said Deepak Nath, the company's chief executive officer. “While the revised outlook reflects the headwinds across our surgical businesses in China, we remain convinced that our transformation to a higher growth company, with the ability to drive operating leverage through to the bottom line, is on the right course.”

Following the results, investment bank analysts were quick to react. Deutsche Bank downgraded Smith & Nephew to Hold from Buy, cutting the price target to 1,250p a share from 1,350p.

Deutsche Bank said Smith & Nephew's Q3 sales update was “disappointing,” delivering underlying growth of 4%, noting the negative impact from China, where the expected headwinds across its surgical businesses were worse than anticipated.

Deutsche Bank believes Smith & Nephew's updated outlook results in at least a one-year setback to the company reaching its mid-term targets.

Meanwhile, analysts at UBS, JPMorgan, Stifel and Barclays all cut their targets for Smith & Nephew shares in reaction to the latest report.