- Price
- $29.06
- Fair value
- $38.00
- Discount
- 23.5%
- Uncertainty
- Medium
- LSEG rating
- 3.00
- Moat
- Narrow
- Next earnings
- 2026-11-04
- Next earnings is estimate
- No
- Company name
- Smith+Nephew
- Sector
- Medical devices (orthopaedics & wound care)
- About
- Smith+Nephew is a British medical technology company. It has three business units. Orthopaedics sells knee and hip implants and related products. Sports Medicine & ENT sells implants and instruments for joint repair, such as shoulder anchors and the REGENETEN implant, and equipment for arthroscopic surgery. Advanced Wound Management sells dressings, negative pressure wound therapy such as PICO, and bioactive products such as SANTYL and skin substitutes. Revenue was $3.10 billion in the first half of 2026. Surgeons train on its systems and hospitals keep its instruments and implant sets, which makes it costly for them to change suppliers. The company trades on the London Stock Exchange, and its American depositary shares (SNN) trade on the NYSE.
- Thesis
- The market prices Smith+Nephew for weak growth in its Orthopaedics business and for doubt that its turnaround can continue. In August 2026, it cut its 2026 revenue growth outlook to about 4% from about 6%, because of problems in U.S. hip and knee implants and lower sales of SANTYL. Underlying revenue grew only 1.6% in Q2 2026. The CFO, John Rogers, said in August 2026 that he will leave on September 30, 2026, and the company has not named a successor. Profit is stronger: trading profit rose 8.1% in the first half of 2026, and the trading profit margin rose to 18.3%, helped by efficiency savings. For the gap to close, three things must be true. Revenue growth must rise to 5.0% to 5.5% in the second half of 2026, as the company expects. Orthopaedics must grow again in 2027 with new products such as the cementless LANDMARK knee and CATALYSTEM hip. The company must meet its 2026 guidance of about 8% trading profit growth excluding acquisitions and about $800 million of free cash flow. The Q3 2026 trading report on November 4, 2026, and the full-year results in February 2027 give the tests. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a longer weakness in U.S. Orthopaedics, where larger competitors are strong.
- Risks
- Orthopaedics growth is weak, with problems in U.S. hip and knee implants in Q2 2026. If the new knee and hip products do not win surgeons in late 2026 and 2027, the company loses more share to larger competitors.
Lower U.S. sales of skin substitutes reduce revenue in Advanced Wound Bioactives. The company expects this headwind to be near the top of its range of $20 million to $40 million in 2026.
The CFO left on September 30, 2026, and the company has not named a successor. Changes in the leadership team can slow the turnaround plan.
Tariffs on medical devices can raise costs. The company expects the net effect of tariffs to be broadly neutral in 2026 only because of tariff refunds.
- Balance sheet
- Cash: $754M
Debt: $3.6B
Net debt: $2.8B
Net debt / EBITDA: 1.8× (low)
Interest cover: 6.9×
Debt due within 12 months: $508M
Smith+Nephew funds itself with corporate bonds, private placement notes and bank facilities. At June 27, 2026, borrowings were $3.59 billion: $2.67 billion of corporate bonds, $410 million of private placement notes and $508 million of current bank borrowings and loans. Cash and cash equivalents were $754 million. Net debt, including lease liabilities, was $3.02 billion, up from $2.76 billion at December 31, 2025, after the purchase of Integrity Orthopaedics and share buybacks. Net debt to adjusted EBITDA was 1.8 times. The company had access to committed facilities of $4.7 billion. A $350 million bond and $140 million of private placement debt were due in the first half of 2027. In September 2026, it issued $700 million of notes due 2036, redeemed the $350 million bond due 2027 and bought back part of its notes due 2030. Interest cover is operating profit divided by interest expense for the first half of 2026.
As of 2026-06-27.
- Checkpoints
- Nov 4, 2026: Q3 2026 trading report: return to faster growth. Pending. Watch: Underlying revenue growth near 5% with better U.S. Orthopaedics and SANTYL growth, and the 2026 guidance kept, pass; growth near 2% or a cut to profit guidance fails.
Feb 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: Trading profit growth of about 8% excluding acquisitions, free cash flow near $800 million and a 2027 outlook for Orthopaedics growth pass; a miss or a weak outlook fails.
- Recent events
- 2026-10-08: Smith+Nephew said it will publish its Q3 2026 trading report on November 4, 2026.
2026-09-18: Smith+Nephew said it will redeem its $350 million of 5.150% notes due 2027. On September 16, 2026, it announced the results of a cash tender offer for up to $250 million of its 2.032% notes due 2030.
2026-09-10: Smith+Nephew priced an issue of $700 million of 5.750% notes due 2036.
2026-08-19: Smith+Nephew said that CFO John Rogers will leave on September 30, 2026, to take an external position in the U.S. He stepped down from the board at once, and the company started a search for his successor.
2026-08-04: Smith+Nephew reported Q2 and first half 2026 results. Q2 revenue was $1,597 million, with underlying growth of 1.6%. First half trading profit rose 8.1% to $566 million and adjusted EPS rose 11.0% to 47.7 cents. The company cut its 2026 revenue growth outlook to about 4% from about 6%, but kept its guidance for about 8% trading profit growth and about $800 million of free cash flow. The interim dividend rose 4.0% to 15.6 cents.
2026-05-06: Smith+Nephew started a $500 million share buyback program. By August 3, 2026, $216 million of it was settled.