UK's Smith & Nephew misses Q3 revenue estimates, cuts outlook on slower US orthopaedics market

Overview

• UK medical technology firm's Q3 revenue grew 3.4% yr/yr but missed analyst expectations

• Company cut full-year revenue and profit growth guidance due to slower US Orthopaedics

• $500 mln share buyback on track, with $250 mln completed by end-Q3

Outlook

• Company now expects full-year underlying revenue growth of around 3%, down from around 4%

• Company expects full-year trading profit growth of around 4%, with trading profit near $1.25 bln

• Company sees full-year free cash flow of around $750 mln, with cash conversion near 95%

Result Drivers

• SPORTS MEDICINE & ADVANCED WOUND DEVICES - Co said double-digit growth in Sports Medicine Joint Repair and strong performance in Advanced Wound Devices drove Q3 results

• ORTHOPAEDICS PRESSURE - Co said US Orthopaedics, especially Hips and Knees, continued to face weak market conditions, limiting overall growth

• NEWER PRODUCTS - Co said recent product launches contributed over half of Q3 growth, with several products achieving double-digit growth

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 13 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the medical equipment, supplies & distribution peer group is "buy."

• Wall Street's median 12-month price target for Smith & Nephew PLC is GBp1,220.00, about 9.2% above its November 3 closing price of GBp1,117.50

• The stock recently traded at 12 times the next 12-month earnings vs. a P/E of 12 three months ago

Reuters Recommended Reads

• Nov 2 - Denmark medical devices maker Coloplast's Q4 revenue rises

• Nov 3 - Germany's Fresenius Medical says Q3 results weighed by China; narrows forecast

• Nov 3 - AtriCure Q3 revenue beats expectations on strong sales of pain management and appendage devices

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)