Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Smiths Group has a much sharper focus on organic growth now, says Barclays Capital

Cash flow has seen a material, positive change as the benefits of the focus on working capital, operational improvements and a reduction in pension contributions affect the business
Medical device
Given Smiths’ historical counter-cyclical performance, BarCap wouldn’t be surprised to see investors remain more focused on the more cyclical companies

Barclays Capital has initiated coverage of Smiths Group PLC (LON:SMIN), the technology company, with an ‘overweight’ rating.

The bank’s positive view of the FTSE 100 is based on what it sees as a material change under the current management team.

READ: Smiths Group expects healthy tax cut in US

“Since Andy Reynolds Smith took over as CEO in 2015 we have seen a return to active management of the portfolio, an operational improvement seen through much improved cash dynamics and a much greater focus on organic growth,” BarCap said.

The bank has crunched the numbers and reckons it now has a higher free cash flow margin than its peers for the first time since 2010.

The pension deficit, which has been a millstone around the company’s neck for many years, is diminishing; in the last financial two years Smiths has reported an accounting surplus and as a result, the group is putting less into the pension pot.

READ: Smiths Group posts solid growth in reported profits, revenue, but underlying growth more constrained

Management has been a lot more active of late in reshaping the portfolio, getting shot of six businesses and acquiring two new units since 2015.

“Conglomerate businesses of this nature need to remain proactive and this had slowed under the previous CEO,” opined BarCap.

The bank has a price target of 1,800p, some 260p above the current share price.

View full SMIN profile View Profile

Smiths Group Timeline

Related Articles

Hong Kong harbour
September 17 2018
The transition of the business through the diversification of legacy assets and investing in new opportunities in Asia is well underway, said chairman John Croft
picture of oilfield
March 14 2018
Svetlana Mendesh, Chief Financial Officer, said 2016 results were in line with its projections and local market trends.
Picture of Malaysian city
May 09 2018
The group’s ability to provide benefits to the retail sector was demonstrated in 2017.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use