Smith & Nephew (SNN) Couild Weaken 10% on Lower Possibility of M&A, Says Deutsche Bank (SYK)

Weakness in Smith & Nephew (NYSE: SNN) Tuesday was tied to Stryker Corp. (NYSE: SYK) large buyback plan. In the view of analyst Yi-Dan Wang of Deutsche Bank, the stock may weaken as much as 10% due on reduced M&A optimism.

Wang explained, "The $2bn share buyback programme SYK just announced is not SYK's first ever share buyback programme. However, it is the biggest one it has announced since 2007. Until today, the share buyback programmes SYK announced ranged from around $500m to $1bn each."

"Today’s news may drive some investors to take the view that contrary to comments in the press, SYK would not be making an offer for S&N in the near term," continued the analyst. "If this concern builds, then shares in S&N may weaken further, perhaps down to 1050-1100p i.e. -10% from yesterday’s close. We believe this would reflect the removal of the bid premium that we estimate was incorporated into them."

For an analyst ratings summary and ratings history on Smith & Nephew click here. For more ratings news on Smith & Nephew click here.

Shares of Smith & Nephew closed at $36.85 yesterday.

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