Smith & Nephew PLC's (LSE:SN) new strategic plan and 2028 outlook look ambitious, City analysts said, but have been received with some heavy dashes of scepticism.
UBS, which kept its rating on the shares at 'neutral' and set a 1,290p price target versus a last close at 1,265p, said treating the targets with caution is warranted as the company has achieved growth of over 6% only six times in the past 20 years, "and only two times in the past 15 years (one of which was 2021 COVID recovery)".
Analysts at broker Panmure Liberum were also slightly incredulous. Looking forward to more detail at the planned capital markets day, "which will set out the 'how' but absent a bold change in strategy (which doesn’t appear forthcoming), we remain sceptical about why SN is suddenly going to be able to achieve market growth in Ortho when it has failed to do so for many years."
The FTSE 100 company upgraded parts of its 2025 guidance, with margins now expected to reach at least 19.5%, a touch above consensus, and free cash flow now expected to be around $800 million.
Initial 2026 guidance points to modest upside, with organic revenue growth of around 6% and profit growth set to run ahead of that.
The new mid-term outlook through to 2028 "implies significant acceleration versus history", UBS noted, with management signalling 6-7% organic revenue growth and 9-10% profit growth, which the analysts calculated would require a roughly 4% uplift to consensus estimates.
Management also disclosed it expects to take a $200 million provision in 2025, alongside further moves aimed at improving inventory efficiency.