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Smith & Nephew on track to deliver full-year guidance as third-quarter revenue rises thanks to strong demand in US, emerging markets

In a brief trading update, the FTSE 100-listed medical technology group said its third-quarter revenue was US$1.169bn, up 2% on a reported basis and 3% on an underlying basis
Knees
S&N forecast that its 2018 underlying revenue would be in the lower half of the 2% to 3% range

Smith & Nephew PLC (LON:SN.) shares rose on Thursday after the medical technology firm said it is on track to deliver in its full-year guidance as it reported solid growth in third-quarter revenue thanks to strong demand in the US and emerging markets.

In a brief trading update, the FTSE 100-listed group said its third-quarter revenue was US$1.169bn, up 2% on a reported basis and 3% on an underlying basis.

READ: New Smith & Nephew boss gives bullish assessment of artificial hip maker’s health

The firm said quarterly underlying revenue growth was 4% in the US and 10% in emerging markets.

The artificial knees and hips maker forecast that its 2018 underlying revenue would be in the lower half of the 2% to 3% guidance range, but said it expected its trading profit margin to be above last year's thanks to improved cost controls and a favourable legal settlement.

Namal Nawana, S&N’s recently appointed chief executive officer, said: "These results were achieved whilst successfully redesigning how we will run the company. There is still more to do, and I am pleased with the pace of progress and engagement across the organisation."

Hips and knees growth

In a note to clients, analysts at UBS commented: “Both Hips & Knee growth was 4% underlying, in line with the acceleration management expected but ahead of cons in our view.

“However weakness in Europe and Wound Bioactives (-7%) means that management now guides to the bottom end of the previous range of 2-3% underlying revenue growth.”

They added: “Investors are looking for cost control, but revenue guidance may be a focus.”

UBS reiterated a ‘neutral’ stance and 1,340p per share 12-month price target on Smith & Nephew.

In late morning trading in London, the bluechip stock was 6.7% higher at 1,359p.

 -- Adds analyst comment, share price --

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