On Jul 3, 2013, Zacks Investment Research upgraded
Smith & Nephew
) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold).
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Why the Upgrade?
Smith & Nephew has watched its earnings estimates trend
higher since it reported first-quarter 2013 results. Out of 6
analysts covering the stock for 2013, 2 revised estimates upwards
with no downward revision. Similarly, 2 out of 4 analyst covering
the stock for 2014 revised estimates higher over the last 60
Based on the quarterly performance, business expansion strategy,
improved outlook for the industry and gradual stability in the
U.S. market, earnings estimates have been moving higher for this
worldwide medical technology company.
The company reported revenues of $1,075 million in the first
quarter to edge past the Zacks Consensus Estimate of $1,064
million. Moreover, Smith & Nephew has an average earnings
beat of 3.33% over the last 4 quarters. The long-term expected
earnings growth rate for the stock is 6.90%.
Since it reported the first-quarter 2013 earnings results on May
2, 2013, the company has undertaken several initiatives to
strengthen its product portfolio and expand its geographical
foothold. During the earnings call, Smith & Nephew announced
an agreement to take over Adler Mediequip Private Limited and
with it, the brands and assets of Sushrut Surgicals Private
Limited, a leader in mid-tier, orthopaedic trauma products for
the Indian market.
The buyout gives the company an opportunity to gain a foothold in
the burgeoning trauma market in India. The acquisition will also
support the company's plans to develop offerings for the mid-tier
market in India.
Last month, Smith & Nephew unveiled a strategic partnership
to promote its IV3000 range of cannula dressings from its
Advanced Wound Management (AWM) franchise in the U.K. The
company's persistent focus on AWM franchise has already begun to
yield positive results.
Smith & Nephew also stands to gain from the improved economic
overview in the U.S. and stability in the orthorecon market.
Meanwhile, the trauma and extremity business represent
Accordingly, the Zacks Consensus Estimate for 2013 climbed higher
to $3.88 per share as estimates were revised upwards over the
last 60 days. The estimate revision trend for 2014 was also
bullish with the Zacks Consensus Estimate currently pegged at
$4.27 per share, a 10.21% growth projection.
Smith & Nephew is due to report its second quarter 2013
results in late Jul/early Aug. The Zacks Consensus Estimate at
the moment is pegged at 91 cents per share.
Other Stocks to Consider
Among other stocks in the industry,
Wright Medical Group Inc
) appear impressive. While Wright Medical carries a Zacks Rank #1
(Strong Buy), the others are Zacks Rank #2 stocks.