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Smith & Nephew PLC ADR SNN

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Morningstar’s Analysis

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Smith & Nephew Stuck in Midtier Competitive Position; No Change to Our Fair Value Estimate

Debbie S. Wang Senior Equity Analyst

Analyst Note

| Debbie S. Wang |

While we generally applaud narrow-moat Smith & Nephew’s recent strategic decisions and operational efforts, we’re still not highly confident that this midsize competitor will be able to thrive in a market that has become more and more highly consolidated, especially as hospital customers have sought to leverage volume purchases with fewer vendors. We’ve seen little in recent results to shift our intrinsic value, though we’re mindful that increasing transmission of the delta variant could put pressure on the resumption of elective procedure volume in localized geographies as we head into the fall. If this comes to pass, it would knock roughly $1 off our $43 fair value estimate.

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Company Profile

Business Description

Smith & Nephew designs, manufactures, and markets orthopedic devices, sports medicine and ENT technologies, and wound-care solutions. Slightly more than 40% of the U.K.-based firm's revenue comes from orthopedic products, and another 30% is sports medicine and ENT. The remaining 27% of revenue is from the advanced wound therapy segment. Roughly half of Smith & Nephew's total revenue comes from the United States, just over 30% is from other developed markets, and emerging markets account for the remainder.

Hatters Lane, Building 5, Croxley Park
Watford, Hertfordshire, WD18 8YE, United Kingdom
T +44 1923477100
Sector Healthcare
Industry Medical Devices
Most Recent Earnings Dec 31, 2014
Fiscal Year End Dec 31, 2020
Stock Type
Employees 18,581