Opinions
Martin Cobb, ASIP
Smith & Nephew PLC
SNN-N
TOP PICK
Feb 05, 2025
$26.170
Stock price when the opinion was issued
biotechnology
pharmaceutical
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HOLD
They're a UK medical technology company, 75% in hips and knees. They had hiccups a year ago in their wound management business, but have subsided. He has owned this. He doesn't own it now, because the options market isn't very liquid in the U.S. Also, Stryker is the leader in robotics, and SNN is only second or third, launching in 2021. SNN has similar growth to Stryker. Good to hold.
biotechnology
pharmaceutical
COMMENT
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.
biotechnology
pharmaceutical
TOP PICK
UK-based company. Hip and knee replacement. Huge long-term growth area. Medical devices are easier than pharma to get approval to come to market. Surgeries put on hold from Covid, huge backlog. 15x earnings, double-digit grower for years to come starting in 2023. Yield is 2.35%. (Analysts’ price target is $36.13)
biotechnology
pharmaceutical
TOP PICK
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.
biotechnology
pharmaceutical
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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%.
(Analysts’ price target is $29.21)