Broker snap: Investec downgrades Smith and Nephew to hold

28th Mar 2012 11:16

Investec has this morning downgraded its rating for medical devices maker Smith and Nephew from buy to hold and cut the target price slightly from 663p to 660p."We move our recommendation from buy to hold as, whilst we think the business is making good progress, the combination of what looks like a relatively full valuation, a likely dull set of Q1 results and the longer-term nature of a lot of the upside drivers, suggests that the scope for short-term outperformance is limited," said analyst Sebastian Jantet.He said that improving volumes in the US and acquisitions could potentially provide some upside to the stock, "but the timing of these remains hard to call."Jantet did provide a little optimism though: "Going in the right direction - we think Smith & Nephew has made a lot of progress over the last year, with the new CEO driving through not only a new strategy, but also creating a sense that the company is on the front foot for the first time in a while." "We think the market is increasingly warming to his plans for the business and, if correctly executed, we think Smith & Nephew could steal a lead over its peers," he said.Shares were down 0.48% at 628p in mid-morning trade on Wednesday.BC