On Monday, RBC Capital maintained its optimistic outlook on Smith & Nephew PLC (LON:SN:LN) (NYSE: SNN), reiterating its Outperform rating and a price target of £15.00.
The firm's stance is based on the potential of Smith & Nephew's Orthopaedics division to achieve EBIT margins comparable to its industry peers over the medium to long term.
RBC Capital projects that achieving market-level growth within this division could result in an upside of over 10% to the consensus estimate for the company's 2027 earnings per share (EPS).
The analyst from RBC Capital expressed a slightly more conservative view in their own forecasts, which still positions them 6% ahead of the market consensus for the year 2027. This cautious approach takes into account the recent downturn in Smith & Nephew's share price, which RBC Capital suggests might present a buying opportunity as the third quarter approaches.
Despite the potential for an uptick in share value, RBC Capital anticipates that an upgrade to the fiscal year 2024 margin guidance, which the market has been expecting, is unlikely to occur. This assessment aligns with the firm's reiterated Outperform rating and the price target of £15.00 per share for Smith & Nephew, signaling confidence in the company's future performance despite near-term market expectations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.