Smith & Nephew Share Price is in Recovery Mode: What Next?

Summary:
• Smith & Nephew share price has been in a slow comeback in the past few weeks as UK stocks stage a comeback.

Smith & Nephew share price has been in a slow comeback in the past few weeks as UK stocks stage a comeback. The stock rose to a high of 1,105p in November, which was the highest level since October 5. It has rallied by more than 12% from the lowest level this year, giving it a market cap of over £9.1 billion.

Is SN a good investment?

Smith & Nephew is a Watford-headquartered company that manufactures quality wound management solutions. Its products are sold globally, where it holds substantial market share. The firm has expanded its business over the years through acquisitions. For example, the firm acquire Blue Belt Technologies in 2015 followed by Brainlab and Altracsys Sarl in 2019. It acquired Engage Surgical in January this year.

Smith & Nephew share price has been in an upward trend after it published mild financial results in November. Its revenue grew by 4.8% in the third quarter, better than what the management had guided. It jumped to $1.25 billion. 

Orthopedics revenue rose by 2.1% while Sports Medicine & ENT revenue rose by 7.1%. Advanced Wound Management rose by 6%. The firm expects that its full-year underlying revenue will be in the middle of its guidance. 

The company is in the middle of a turnaround by implementing a 12-point plan to improve its performance. Part of the strategy involves reducing the backorders and improving instrument set deployments in orthopedics. 

Smith & Nephew has a strong dividend yield of about 3.89% and is a good acquisition target. Analysts have a mixed view of the company, with those at Berenberg Bank and Royal Bank of Canada expecting that it will rise to 1,400p and 1,500p, respectively.

Smith & Nephew share price forecast

The four-hour chart shows that the SN stock price has been in a bullish trend in the past few weeks. It has rallied from a low of 960p to a high of 1,107p. Along the way, the stock moved above all moving averages. It also formed an ascending channel shown in orange while the Relative Strength Index (RSI) has moved below the overbought level of 70.

Therefore, the stock will likely continue rising as buyers target the next key resistance level at 1,120p. A drop below the support at 1,000p will invalidate the bullish view.