Citi starts Smiths Group at 'buy', says Medical offers defensive growth

19th Sep 2018 11:24

(Sharecast News) - Citi started coverage of engineer Smiths Group at 'buy' on Wednesday with an 1,850p price target.The bank said Smiths Medical offers defensive growth, John Crane is leveraged to rising late-cycle oil & gas process capex and Smiths Detection is benefitting as airports invest to meet regulatory standards. Cit said that even though talks about combining Smiths' medical business with US-based ICU medical have ended, they highlight the fact that Medical is again "in play" and the potential to unlock value trapped within the conglomerate structure."We see Medical's defensive attributes as an intrinsic advantage given the macro risks worrying cyclicals' investors at present," Citi said.Smiths said last week that it had abandoned talks with ICU Medical after the two failed to agree terms.The company, which confirmed back in May that it was in early talks with ICU Medical, said the board recognised the complementary strengths of the business but that it was important that any combination did not undervalue Smiths Medical and its prospects.Chief executive Andy Reynolds Smith said at the time: "We have ended discussions with ICU today after careful consideration and in the interests of our shareholders. Smiths Medical will continue to capitalise on the increased investment that it is making in new product development. We remain confident that our strategy for Smiths Medical will drive market outperformance and world-class competitiveness."Alongside continued active portfolio management across all our businesses, this will deliver long-term sustainable growth and attractive returns for our shareholders."At 1245 BST, the shares were up 0.9% to 1,565p.