We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us

Berenberg lowers target price on Smith & Nephew

Fri 01 October 2021 10:54 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Analyst at Berenberg cut their target price on medical equipment manufacturer Smith & Nephew from £20.20 to £18.80 on Friday, stating the firm was now facing a "bumpier road" to the "same destination".

Berenberg, which stood by its 'buy' rating on the stock, said it continues to believe that Smith & Nephew's current share price "materially" undervalues its longer-term revenue growth and margin expansion potential, noting it has "good products" in growth markets, the ability to sell them effectively and a "largely under control" cost base.

However, the German bank stated that with Covid-19 still affecting the business and cost pressures only building, the short-term outlook for S&N was looking "increasingly uncertain", in its view.

"Thus, if we only took a short-term view, we would find it hard to recommend buying Smith & Nephew's shares, but they are so undervalued, in our view, that we simply view any near-term volatility as an opportunity," said the analysts.

"Given the weaker near-term performance that we now expect, we have reduced our 2021E and 2022E adjusted EPS estimates by 4% and 3% respectively but, as these changes are largely COVID-19-related, our adjusted EPS estimates decline by less than 1% thereafter. The 7% reduction in our DCF-derived price target is partly related to these forecast changes, but it is mainly a consequence of factoring rising UK bond yields into our DCF, which has driven our WACC up by 40bp to 6.3%."

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

    More stockbroker tips from ShareCast

    Latest economy and stock market articles