Berenberg Maintains Hold Rating on Smith & Nephew with £13.00 Price Target

Berenberg Bank maintains a Hold rating for Smith & Nephew (SN) with a price target of £13.00. Analyst Sam England has a 52.17% success rate and a -0.8% average return. The current analyst consensus is a Moderate Buy with an average price target of £1,343.80. The stock has a market cap of £11.72B and a P/E ratio of 30.87. Corporate insider sentiment is negative, with 73 insiders selling their shares over the past quarter.

Smith & Nephew plc (NYSE: SN) reported robust financial performance for the second quarter and first half of 2025, exceeding market expectations. The company's earnings call, held on August 5, 2025, highlighted significant advancements in revenue growth and profitability.

Revenue and Growth
Smith & Nephew's revenue for the quarter was $1.6 billion, showing a 6.7% underlying growth rate, with a reported growth of 7.8% due to favorable foreign exchange rates. The company achieved sequential acceleration across all regions and business units. The U.S. market grew by 8.7%, while other established markets saw a 7.4% increase. Emerging markets, however, declined by 0.2%, primarily due to volume-based procurement (VBP) impacts in China, which are expected to ease in the second half.

Profitability and Cash Flow
The company reported a 100 basis point expansion in trading margin for the first half, slightly ahead of guidance. This expansion is expected to continue in the second half, driven by cost savings and reduced headwinds from VBP in China. Smith & Nephew's free cash flow increased by 70% to $250 million in the first half, reflecting operational efficiencies and a $500 million share buyback announced for the second half of 2025.

Business Unit Performance
- Orthopaedics: The business unit grew by 5.5%, with strong performance in Reconstruction Robotics and global knees and hips.
- Sports Medicine: Joint Repair growth was 8.4%, with double-digit growth across knee, shoulder, and hip repair.
- Advanced Wound Management: Growth increased to 10.2% due to a rebound in Bioactives.
- Trauma and Extremities: The unit grew by 4.4%, with steady contributions from AETOS and the launch of new products.

Analyst Views
Analysts maintain a mixed sentiment towards Smith & Nephew. Berenberg Bank maintains a Hold rating with a price target of £13.00, while the current analyst consensus is a Moderate Buy with an average price target of £1,343.80. The stock has a market cap of £11.72 billion and a P/E ratio of 30.87. Corporate insider sentiment is negative, with 73 insiders selling their shares over the past quarter.

Smith & Nephew's strong performance in Q2 2025 positions it well for the remainder of the year, with a focus on continued growth and profitability.

References
[1] https://www.insidermonkey.com/blog/smith-nephew-plc-nysesnn-q2-2025-earnings-call-transcript-1584616/