Smith & Nephew has slipped back despite analysts continuing to believe there is a chance US rival Stryker could strike.
The medical device company’s shares are down 22p at £11.58 as UBS moved from buy to neutral but raised its target price from £11 to £11.75.
The bank reckoned there could be a takeout bid of £13 or more and said:
As we have argued previously we see a chance that Stryker makes a bid for Smith & Nephew, based on historic multiples including Zimmer Biomet, at a price of £13 or more. We have also examined, in depth, the possibility of a three way deal with Coloplast amongst the bidders for the wound care business.
We have no insight on if or when a deal might be proposed. Our price target is now the midpoint of our upside (a takeout at £13) and downside (standalone valuation of £10.50) scenarios.
At the fourth quarter results on 5 February we expect two areas of focus. (1) Tough fourth quarter Orthopaedic comparisons after a strong final quarter last year, possibly due to patient confusion over the impact of healthcare reform which won’t repeat. (2) Wound care’s continued improvement after a weak first half.
