Smith & Nephew PLC (LSE:SN) shares represent a “rare value opportunity”, according to a leading investment bank that has reiterated its bullish stance on and price target for stock in the medical devices giant.
Credit Suisse reckons November 4’s trading update could act as a catalyst for the price, though it admits there may also be some pressures – including price and technology pressures and dilutive M&A.
It values S&N at 1,805p, which is a 44% premium to the current share price.
It came up with the target using a discounted cash flow model that incorporated 10-year sales growth of 6% and a 23% trading margin.
S&N is “materially undervalued” it has concluded both on a sales and earnings multiple.
In afternoon trade the shares were changing hands for 1,250p, barely changed on the day.
