Smith & Nephew (SN) AI Stock Analysis

• Market Cap: £9.47B
• Dividend Yield: 3.23%
• Average Volume (3M): 2.26M
• Price to Earnings (P/E): 29.3
• Beta (1Y): 1.05
• Revenue Growth: 1.85%
• EPS Growth: 51.77%
• Country: UK
• Employees: 17,349
• Sector: Healthcare
• Sector Strength: 53
• Industry: Medical - Devices
• EPS (TTM): 0.35
• Shares Outstanding: 875,945,300
• 10 Day Avg. Volume: 1,914,717
• 30 Day Avg. Volume: 2,256,751
• PEG Ratio: -0.90
• Price to Book (P/B): 2.23
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 106.68
• Enterprise Value/Market Cap: 2.43
• Enterprise Value/Revenue: 1.27
• Enterprise Value/Gross Profit: 5.80
• Enterprise Value/Ebitda: 6.52
• 1Y Price Target: £1,252.50
• Price Target Upside: 16.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 76 Outperform
• Price Target: ―

Smith & Nephew demonstrates robust financial performance with consistent revenue growth and effective cost management. Earnings call insights reinforce confidence in future growth, despite pricing pressures and challenges in China. However, the high P/E ratio and neutral technical indicators suggest cautious optimism. Overall, the stock is positioned for moderate growth with potential upside if operational improvements continue.

Positive Factors

Earnings

Smith+Nephew had an encouraging start to 2025 in 1Q25, with organic growth at 3.1%, surpassing the initial guidance of 1%-2%.

Financial Performance

Significant cost savings are being achieved, with expectations to reach $300 million by the end of 2025, indicating strong financial management.

Market Position

The company holds a strong position in the European market with its robotic platform, ranking as the #1 provider.

Negative Factors

Market Challenges

China headwind (Recon destocking and Sports Medicine VBP) continued to impact sales, highlighting ongoing challenges in that region.

Operational Risks

Key risks to achieving 2025 margin targets include challenges with cost savings, performance in China, and operational leverage, particularly in the US orthopedic market.

Segment Performance

The orthopedic segment is currently not contributing positively, and the potential for robotics to gain market share has not materialized.

Smith & Nephew Business Overview & Revenue Model

Company Description

Smith & Nephew (SN) is a global medical technology company that specializes in the development, manufacturing, and marketing of a wide range of advanced medical devices. The company operates primarily in three sectors: Orthopaedics, Sports Medicine & ENT, and Advanced Wound Management. Smith & Nephew is known for its innovative products, which include joint replacement systems, trauma devices, arthroscopy products, and wound care solutions, aimed at improving patient outcomes and enhancing the quality of life.

How the Company Makes Money

Smith & Nephew generates revenue through the sale of its medical devices and products across its three primary sectors. In the Orthopaedics sector, the company earns money by providing joint replacement systems and trauma devices used in surgical procedures. The Sports Medicine & ENT sector contributes to revenue through the sale of products used in minimally invasive surgery and treatments for ear, nose, and throat conditions. The Advanced Wound Management sector generates income from the sale of products designed to manage chronic and acute wounds. Additionally, Smith & Nephew benefits from strategic partnerships and collaborations with healthcare providers and research institutions, which help in expanding its market reach and driving sales growth. The company's global presence, with operations in over 100 countries, further supports its revenue streams by tapping into diverse markets and meeting the varying needs of healthcare systems worldwide.

Smith & Nephew Financial Statement Overview

Summary

Smith & Nephew exhibits strong financial health with consistent revenue growth and profitability improvements. The company efficiently manages its operating costs and debt levels, leading to enhanced net income and shareholder returns. Cash flows are robust, providing a solid foundation for future investments. Nonetheless, continuous focus on optimizing capital expenditures and leveraging assets more effectively will further strengthen its financial position.

Income Statement

The company's revenue has shown a consistent growth, rising 4.7% from 2023 to 2024. Gross profit margin remains strong at 69.6% in 2024, indicating effective cost management. Net profit margin improved from 4.7% in 2023 to 7.1% in 2024, showcasing enhanced profitability. EBIT and EBITDA margins also improved, reflecting operational efficiency. However, the growth rate could be higher compared to peers in the industry.

Balance Sheet

Smith & Nephew's debt-to-equity ratio stands at 0.63, indicating moderate leverage and effective use of debt. Return on equity increased to 7.8% in 2024, revealing improved shareholder value generation. The equity ratio is stable, although slightly lower than ideal industry standards, indicating room for improvement in reducing liabilities relative to assets.

Cash Flow

The company demonstrated strong cash flow management with operating cash flow exceeding net income, suggesting effective cash generation from operations. Free cash flow grew significantly by 234.8% from 2023 to 2024. Both operating and free cash flow to net income ratios are favorable, indicating robust cash flow relative to profitability. However, the high capital expenditures could impact future free cash flow growth.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.64B	5.81B	5.55B	5.21B	5.21B	4.56B
	Gross Profit
3.97B	4.05B	3.89B	3.67B	3.67B	3.16B
	EBIT
735.00M	657.00M	425.00M	315.00M	593.00M	295.00M
	EBITDA
1.06B	1.22B	956.00M	943.00M	1.24B	866.00M
	Net Income Common Stockholders
305.00M	412.00M	263.00M	223.00M	524.00M	448.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
568.00M	619.00M	302.00M	350.00M	1.29B	1.76B
	Total Assets
10.54B	10.35B	9.99B	9.97B	10.92B	11.01B
	Total Debt
3.65B	3.32B	3.08B	2.87B	3.34B	3.69B
	Net Debt
3.09B	2.70B	2.78B	2.52B	2.05B	1.93B
	Total Liabilities
5.34B	5.09B	4.77B	4.71B	5.35B	5.73B
	Stockholders Equity
5.21B	5.26B	5.22B	5.26B	5.57B	5.28B
Cash Flow		Free Cash Flow
301.00M	606.00M	181.00M	110.00M	469.00M	492.00M
	Operating Cash Flow
733.00M	987.00M	608.00M	468.00M	877.00M	935.00M
	Investing Cash Flow
-626.00M	-569.00M	-448.00M	-472.00M	-691.00M	-606.00M
	Financing Cash Flow
258.00M	-86.00M	-200.00M	-926.00M	-645.00M	1.16B

Smith & Nephew Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1077.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 1077.5 is below the 20-day moving average (MA) of 1089.00, above the 50-day MA of 1051.80, and above the 200-day MA of 1042.93, indicating a neutral trend. The MACD of 9.82 indicates Positive momentum. The RSI at 47.91 is Neutral, neither overbought nor oversold. The STOCH value of 18.34 is Positive, 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
CTEC	80 Outperform	£5.88B	39.56	11.12%	1.90%	3.94%	41.63%
SN	76 Outperform	£9.47B	29.31	7.78%	3.23%	1.85%	51.77%
SPI	74 Outperform	£844.98M	33.33	3.41%	1.10%	11.20%	-6.80%
HIK	71 Outperform	£4.62B	16.53	15.79%	2.75%	5.83%	83.35%
AMS	67 Neutral	£450.82M	63.14	2.93%	0.74%	40.66%	-55.09%
Sector *	54 Neutral	$5.34B	3.36	-45.10%	3.39%	16.81%	-0.03%