In an uncertain day on the markets, Smith & Nephew stood out with a rise of more than 3%.
The maker of artificial knees and hips reported a 3% rise in third quarter trading profit to $246m, as gains in its orthopaedic business offset a fall in its wound management business after a product recall.
Shares in the business, often tipped as a target for a US group such as Stryker, added 36p to £10.54.
Dr Mick Cooper, an analyst at Edison Investment Research, said:
These results highlight the importance of Smith & Nephew’s strategic shift towards the emerging markets with revenues accelerating to 20% growth and sports medicine where there was 14% growth. There was also an encouraging uptick in growth in US hip sales on the back of its Verilast hip products.
Barclays was also positive, saying:
We had seen the third quarter as the biggest near-term risk to our positive investment thesis on S&N, particularly due to the headwinds in Wound (Renasys recall, Advanced Wound Care weakness). The beat provides reassurance that S&N has enough levers to offset near-term risks in any given business. We also see this as evidence it can lean more on its growth platforms, such as Sports Med, which grew 11% in the quarter. Net-net, we continue to believe fundamental value on S&N is £11.20 a share and see upside potential from optionality around sector consolidation.
Overall the FTSE 100 finished 9.68 points higher at 6463.55, having at one point fallen as low as 6378.15. Investors were cautious about the prospect of an earlier than expected US interest rate rise, following overnight comments from the Federal Reserve. Stronger than forecast US GDP growth initially added to the feeling that dearer borrowing could be on the way, now the Fed has ended its monthly bond buying programme.
But once analysts realised much of the GDP improvement was due to defence rather than consumer spending, markets came back from their worst levels, with the Dow Jones Industrial Average up nearly 1% by the time London closed.
On a busy day for company results, there were mixed reactions to a number of updates. BT fell 7.6p to 367.9p, Royal Dutch Shell A shares slid 8p to 2227.5p but Barclays was 2.05p better at 222.55p.
Another standout was wealth manager St James’s Place, up 24.5p at 712.5p.
Commodity companies came under pressure on concerns about what the Fed’s removal of QE might do to emerging markets. And as the dollar strengthened, silver fell 4% with speculators seeking higher returns elsewhere, while gold was also weaker. So Randgold Resources lost 242p to £37.79 and Fresnillo fell 32.5p to 716.5p.
British Airways and Iberia owner International Airlines Group shook off earlier losses to end 5.5p better at 390.7p despite weak results from Lufthansa. The German airline cut its 2015 profit guidance due to a weak economy and falling ticket prices.
