Smith & Nephew (SNN) PT Lowered to $39 at BofA Securities

BofA Securities analyst Julien Ouaddour lowered the price target on Smith & Nephew (NYSE: SNN) to $39.00 (from $41.00) while maintaining a Buy rating.

The analyst comments "We attended S&N’s CMD in London, where management presented its 2028 ambition of 6-7% organic and 9-10% trading profit growth, implying c4% upside to FY28 consensus. Growth acceleration is expected to be driven by rich product pipeline in most businesses, focus and investment in fastest growth areas and expansion in attractive channels and geographies. Improved inventory discipline should unlock >$1bn in FCF by FY28, with room for meaningful shareholder returns, as well as improve ROIC toward 12-13%. While S&N remains a “show-me” story, we believe the market underappreciates management’s improved execution track record. With shares trading on 14x FY26E P/E for double-digit EPS growth CAGR (mid-teens incl. some buyback given firepower), we see S&N as a compelling value story with re-rating potential toward the sector average. We lower FY26E EPS by -3% to reflect margin headwinds (BofAe 20.0% margin). We lift our PO from £15 to £16 as we roll forward our DCF and apply higher target P/E (18x vs 17x prior) and EBITDA (12x vs 11.5x prior) multiples on faster earnings growth (ADR PO goes from US$41 to US$39 due to FX). We reiterate our Buy rating."

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