Broker snap: S&N acquisition increases risk profile, says Investec

28th Nov 2012 11:13

Investec has kept its 'hold' rating and 670p target price for medical technology group Smith & Nephew following Wednesday's proposed acquisition of Healthpoint Biotherapeutics.Healthpoint, which will be acquired for $782m in cash, is a US-based leader in bioactive debridement, dermal repair and regeneration wound care treatments. The broker said that the purchase is a "good fit" but raises the risk profile of the company as a whole."For us, whilst the acquisition is broadly about strategy, expanding S&N's wound business, it takes S&N into riskier areas, with future performance linked to the outcome of clinical trials," Investec said."Granted the management team has experience in this field, but this, coupled with what looks like full entry multiples, means that we are unlikely to change our 'hold' stance."BC