SNN Stock Forecast & Price Target

Smith & Nephew demonstrated positive underlying growth of 5.3%, with a notable increase of 15.9% when excluding the impacts from China, indicating resilience in its core markets. The company expects a stronger second half of the year, supported by improved operating leverage and cost efficiencies, with anticipated trading profit margins between 19.0% and 20.0% for 2025. Additionally, growth in key segments, including a 4.7% rise in hips and a 5.5% increase in orthopedics, underscores the firm’s robust performance in the U.S. market, despite challenges in international markets like China.

Smith & Nephew's financial outlook appears challenging due to anticipated weaker revenue in Q1 FY25, influenced by factors such as fewer selling days, the impact of China Joint Repair volume-based pricing (VBP), and ongoing distributor inventory reductions. Additionally, the company expects further negative revenue impacts from VBP in its advanced wound therapy segment, alongside a return to normalized growth conditions that may still fall short of prior performance. The orthopedic segment, despite improving, exhibits a return on invested capital (ROIC) significantly below other business units, compounded by risks from evolving US healthcare reimbursement rates and persistent headwinds in the Chinese market.