Smith & Nephew SNN reported solid third-quarter operating results that put it on target to meet our full-year expectations. We're maintaining our fair value estimate. The firm turned in sales of $915 million in the quarter, which represented a 2% reported decline but a 1% constant currency increase. Profitwise, we remain impressed by the firm's cost-control efforts, which kept the operating margin above 20% in the seasonally weak third quarter. We think this bodes well for our long-term margin expansion assumption. In terms of end-market demand, management noted signs of stabilization in the orthopedic market, a trend that its peers also revealed this quarter. Also, while year-over-year comparables remain tough, Smith & Nephew's results in endoscopy showed sequential improvement, and repair-related tools remained strong even year over year, offsetting capital equipment weakness. Smith & Nephew also continued to make progress in its wound-management business in the quarter; the firm received positive intellectual property decisions in the United Kingdom, Australia, and Germany. We expect Smith & Nephew to continue making progress in Kinetic Concepts' KCI negative-pressure wound therapy niche.
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Analyst Notes
07-30-09 | 3:31PM Smith & Nephew Boosts 2Q Profit
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Smith & Nephew PLC Full Analyst Report
Analyst Notes
07-30-09 | 3:31PM Smith & Nephew Boosts 2Q Profit
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