Investing.com -- UBS said Convatec, Smith & Nephew and Sonova offer the most attractive risk/reward going into third-quarter results, as it expects revenue and earnings growth across European medical technology to accelerate on currency tailwinds.

Convatec
UBS expects the wound and ostomy care maker to report 6% organic growth for the second half at its 10-month trading update on Nov. 18, and to reduce the risk around its 2027 guidance. Fund managers are positioned for about 6% organic growth for July to October, with mid-single-digit growth in Wound, Ostomy and Continence and double-digit growth in Infusion Care, UBS said.

They expect guidance of 5.5% to 6.5% organic growth, excluding Innovamatrix, and a 23.0% margin to be reiterated.

UBS is also looking for updates on ConvaNiox, an FDA warning and the search for a chief financial officer. Its price target is £3.75, 71% above the 220 pence share price.

Smith & Nephew
UBS sees limited risk to consensus estimates for the Nov. 4 third-quarter report, while a possible strategic review could draw new interest.

Consensus is 3.75% organic growth, but UBS said fund managers expect about 3.5% after management comments on the second-quarter call.

UBS said positioning is arguably the most negative in its coverage, as most fund managers expect another guidance cut from the current roughly 4% organic revenue growth and about 8% trading profit growth. In U.S. knees, UBS expects a decline of no worse than 5%, and it is looking for a rebound in Wound Devices. Its price target is £11.20, 10% above the current price.

Sonova
UBS expects the hearing-aid maker to raise guidance with first-half results on Nov. 12, because market growth is about 5% against the 3% management assumed, according to peer estimates. The bar is 7% to 9% revenue growth, up from 5% to 8%, and 9% to 11% core EBIT growth, up from 7% to 10%, both at constant currencies, UBS said.

A weaker Swiss franc is also expected to turn the 2 to 3 percentage point currency headwind on core EBIT into a full-year tailwind, which UBS puts at about 3%.

UBS said that adds up to a 4% uplift to consensus core EBIT this year. Rival Demant raised its guidance on Oct. 9, which UBS said bodes well for Sonova. UBS said expectations are somewhat elevated. Its price target is CHF273, 3% above the current price.

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