Shares in Smiths Group rose 6% to 2,739p on Tuesday, among the biggest gainers on the FTSE 100, after full-year results came in slightly ahead of expectations.
The industrial engineering company reported organic revenue growth of 1.2%, with reported revenue up 2% to £1,937 million.
Headline operating profit rose 3% to £399 million, nudging the margin up to 20.6%.
John Crane, its flow control and sealing arm, was the stronger of the two divisions, lifting organic profit 3.5% despite a £20 million hit from the Middle East conflict.
The figures capped a transformative year in which Smiths sold its Detection and Interconnect businesses for a combined £3.3 billion, turning net debt into net cash of £1,747 million.
The company guided to around 4% organic revenue growth and a margin of about 21% for the coming year, broadly in line with forecasts.
It also flagged plans to offload John Crane's legacy US asbestos liability, which analysts at Panmure Liberum noted had been a cash drag of about £20 million a year.
The broker kept a "buy" rating and a 3,070p price target, and said the market undervalued a business trading on about 21.5 times next year's earnings.
Stifel was also positive, repeating a "buy" call and 3,000p target, taking encouragement from a solid fourth-quarter improvement.
The shares had drifted in recent months, reflecting the lack of a pickup in underlying growth, but Stifel said the figures pointed to a better year ahead.
Over the medium term, Smiths is targeting organic revenue growth of 5% to 7% and operating margins of 21% to 23%.
Smiths raised its dividend 5.4% to 48.5p and is preparing a £1.5 billion share buyback.
Chief executive Roland Carter said 2026 had been a year of significant strategic progress.
