Smith & Nephew PLC’s (LON:SN) growth drivers are “underappreciated” according to analysts at Credit Suisse, who have upgraded the stock to ‘outperform’ from ‘neutral’ and upped their target price to 1,805p from 1,560p.
In a note on Wednesday, the bank said investors “underestimate the combined power of recently-acquired growth drivers with corresponding return leverage mid term” and that they expected the medical equipment group’s stock to “reverse its material underperformance over the past 12 months”.
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“With a high exposure to surgical procedures (>60% of FY21E sales) across the portfolio, we think Smith & Nephew should benefit from an elective procedure recovery with potential upside from pent-up demand”, Credit Suisse said.
The bank also said it saw “additional potential for accelerated momentum” from the US launch of the company’s cementless knee options from the second half of the year onwards”.
Shares in Smith & Nephew jumped 2.4% to 1,507p in late-morning trading.