Citi Cuts Smith & Nephew (SNN) from Buy to Sell; Considers Multiple Issues
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Price: $23.88 --0%
Rating Summary:
9 Buy, 13 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 16 | New: 3
Rating Summary:
9 Buy, 13 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 14 | Down: 16 | New: 3
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Shares of Smith & Nephew (NYSE: SNN) are down about 4 percent Thursday afternoon following an earlier two-notch downgrade from Citi.
The firm believes the company’s most practical option is a private-equity takeout, but notes any deal is highly unlikely. While both Stryker (NYSE: SYK) and Zimmer (NYSE: ZMH) could technically make a go for the company, Citi argues such a deal would see serious antitrust issues. Additionally, Johnson and Johnson (NYSE: JNJ) is currently focused on its purchase of Synthes at this time.
Citi also points at Smith & Nephew recently experiencing a loss in growth in the knee & hip segments, and argues the company has no protection to halt these effects moving forward. As a result, Citi reduced its 2012 and 2013 orthopedic sales estimates by 4 percent and 8 percent, respectively. The firm doesn't see a turnaround in the knee and hip market in the near term and sees no upside in emerging markets until at least 2014.
Citi said any synergies from the reverse merger with Biomet are limited and highly unlikely.
The firm moved its investment rating on the stock from Sell to Buy.
The firm believes the company’s most practical option is a private-equity takeout, but notes any deal is highly unlikely. While both Stryker (NYSE: SYK) and Zimmer (NYSE: ZMH) could technically make a go for the company, Citi argues such a deal would see serious antitrust issues. Additionally, Johnson and Johnson (NYSE: JNJ) is currently focused on its purchase of Synthes at this time.
Citi also points at Smith & Nephew recently experiencing a loss in growth in the knee & hip segments, and argues the company has no protection to halt these effects moving forward. As a result, Citi reduced its 2012 and 2013 orthopedic sales estimates by 4 percent and 8 percent, respectively. The firm doesn't see a turnaround in the knee and hip market in the near term and sees no upside in emerging markets until at least 2014.
Citi said any synergies from the reverse merger with Biomet are limited and highly unlikely.
The firm moved its investment rating on the stock from Sell to Buy.
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