On Aug 23, shares of Smith & Nephew, Inc. SNN reached a new 52-week high of $47.67, closing the session marginally lower at $47.01. The stock hit the high following impressive second-quarter fiscal 2019 earnings results.
Smith & Nephew had a great run on the bourses in the past year. The stock has rallied 30.6%, versus than the broader industry’s decline of 0.5%.
A positive growth rate of 6.83% for the next year also instills optimism.
The estimate revision trend for the current year looks impressive. In the last two months, two estimates have moved north, with no movement in the opposite direction.
Factors Driving Smith & Nephew
Let’s take a look at the possible growth propellers.
Strategic Acquisitions: Market has been upbeat about Smith & Nephew’s acquisition of Atracsys Sàrl, the leading Swiss developer of optical tracking technology used in computer-assisted surgery, in July 2019. In June, the company closed the buyout of the Brainlab orthopaedic joint reconstruction business. Both the acquisitions are in sync with Smith & Nephew’s long-term strategy of developing its multi-asset digital surgery and robotics ecosystem, designed to aid surgeons and enhance clinical outcomes.
Product Portfolio Expansion: Investors have been optimistic about Smith & Nephew’s growth prospects since it launched the PICO 14 Single Use Negative Pressure Wound Therapy System (sNPWT) in June to heal deep wounds. Around the same time, the company launched its CONQUEST FN system, a new implant solution which aims to treat femoral neck fractures and preserve bone structure.
Positive Outcomes: In July 2019, the company announced favorable outcomes from the first-ever prospective clinical trial, the STITCH study, which was conducted to assess the efficacy of repairing Horizontal Cleavage Tears (HCTs). Market seems to be upbeat about the results, which are likely to have lifted the stock to a 52-week high.
Zacks Rank & Stocks Worth a Look
Smith & Nephew carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and NuVasive NUVA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medtronic’s long-term earnings growth rate is expected at 7.13%.
Baxter’s long-term earnings growth rate is projected at 12.8%.
NuVasive’s long-term earnings growth rate is expected to be 12.75%.
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