Darren Sissons Smith & Nephew PLC SNN-N COMMENT Oct 07, 2024

US Healthcare For knee replacements and implants he likes SNN-N. He does not prefer the ETFs, such as XLV-N, because they hold too broad of an array of companies, including the big drug companies that are under pressure. He would focus on the tool and device space instead.

He owns Stryker instead. But SNN enjoys a demographic tailwind as Boomers age. Demand will continue to grow.

Global leader in hip and knee replacement, also wound management. Great secular growth story. Earnings weak last couple of years. Demographic and pickleball play. Lowest valuation in 50 years, 14x PE, 12x next year's PE. Revenues re-accelerating. Earnings and margins growing. Yield is 3.7%.

Cheaper than SYK, and probably more narrowly focused.

They make equipment for hip and knee replacements, which is a great place to be. An activist has taken a position here, pushing to break up the company for its underlying value.

Demand continues to grow quite nicely. Competes with SYK (a slightly better business, though at 29x PE), and grows at similar rates. Trades at 13x PE for 10% EPS growth. Likes the risk/reward. Yield is 2.2%.

Hip and knee medical equipment is what they make. Trades at a big discount to Stryker. Benefits from an aging population as well as sports injuries. Has long-term growth. The US is half their market.