Broker snap: Credit Suisse sees open wounds at Smith and Nephew

7th Nov 2011 16:15

For those looking for an investment sticking plaster, don't go for Smith and Nephew, according to analysts at Credit Suisse. The medical equipment manufacturer based in Kingston Upon Hull has been downgraded from "overperform" to "neutral".The number crunchers at Credit Suisse are worried about margins. The mid-term target is a margin of 24%, and Credit Suisse is sceptical that can be achieved as R&D spend and normal price pressures begin to bite. The broker also argues that previous cost cutting programmes have been patchy and fears the current scheme to trim $150m may also fail.As a result of this analysis, Credit Suisse values Smith & Nephew at 600p per share, sees sale growth at 4%, down from 6% and EBIT margin down from 23% to 21%.BS