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Smith & Nephew Downgraded By Barclays, Expects Management Transition To Delay Key Initiatives

Barclay’s Alexander Kleban downgraded Smith & Nephew plc (ADR) SNN 0.18% from Overweight to Equal-Weight while increasing the company’s price target by 0.81 percent.

Although the analyst believed the company’s transition to a higher growth platform is “underappreciated” by the general market in conjunction with remaining potential upside from M&A, results continue to disappoint.

"Additionally, emerging market headwinds should start to dissipate somewhere in H2 and Wound Devices are set for a late 2016-17 product cycle (Renasys re-launch),” stated Kleban.

Weak Management

Kleban viewed the upcoming management team transition as an initiative which wouldn’t take advantage of Smith and Nephew’s optionality as much as before. The analyst believed the management team would delay building S&N’s upper and lower extremities of its portfolio in recon in addition to delaying cost cutting initiatives.

Initiatives required to push S&N forward such as pruning assets with limited overlap was also expected to have a delay according to Kleban.

At time of writing, Smith and Nephew traded at $33.33, down 0.86 percent Wednesday.

Aug 2016BarclaysDowngradesOverweightEqual-weight
May 2016JefferiesUpgradesHoldBuy
Feb 2016Cantor FitzgeraldInitiates Coverage onHold

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