Company Reports

Smith & Nephew delivered second-quarter results that featured underlying revenue growth of 2%. In the first half of 2026, earnings were up 3% year over year. Management trimmed its 2026 revenue outlook by 200 basis points.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its large joint replacements and sports medicine therapies. For example, its Oxinium technology has demonstrated lower rates of revisions in hip replacements. The firm has also commercialized Regeneten, an implant that facilitates the growth of tendonlike tissue.

Smith & Nephew saw abbreviated first-quarter results that included underlying revenue growth of 3%, with strong growth in sports medicine/joint repair (up 10%) and arthroscopic-enabling technologies (up 7%).

Smith & Nephew reported fourth-quarter performance that highlighted 6% underlying revenue growth, largely consistent with 5% top-line growth for 2025. Full-year reported operating margin improved by 160 basis points to 13%.

Smith & Nephew's third-quarter performance included year-over-year revenue growth in the orthopedics and sports medicine segments of 4% and 5%, respectively, on an underlying basis.

Smith & Nephew reported second-quarter operational revenue growth of 7%, with orthopedics and sports medicine delivering solid mid-single-digit results while advanced wound management stood out with 10% year-over-year growth.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its large joint replacements and sports medicine therapies. For example, its Oxinium technology has demonstrated lower rates of revisions in hip replacements. The firm has also commercialized Regeneten, an implant that facilitates the growth of tendonlike tissue.

Smith & Nephew reported abbreviated first-quarter performance that included consolidated revenue, orthopedic, and advanced wound care growth of 3%, 3%, and 8%, respectively (in constant currency).

Smith & Nephew delivered strong fourth-quarter performance with underlying revenue growth of 8% and operating margin improvement of 360 basis points.

In abbreviated quarterly revenue results, Smith & Nephew saw flat sales growth in its emerging markets category, driven by weakness in China.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its hip implants and knee replacements. For example, its Oxinium technology has demonstrated lower rates of revisions in hip replacements. The firm has also commercialized Regeneten, an implant that facilitates the growth of tendonlike tissue.

Now that Smith & Nephew has made gradual and steady progress on improving its operations since CEO Deepak Nath came aboard, we’ve taken another look at its newer technologies that we think should help support its narrow moat over the longer term. We are leaving our fair value estimate unchanged. While we remain pessimistic about the firm’s ability to wrestle large joint reconstruction market share away from larger rivals such as Stryker, Zimmer Biomet, and Johnson & Johnson, we are more optimistic about Smith & Nephew’s products in other therapeutic areas.

Smith & Nephew’s turnaround plan under CEO Deepak Nath seems to be showing signs of progress, especially outside the US. Though improvement has been taking hold, the pace remains on track with our expectations for the full year, and we’re leaving our fair value estimate unchanged. Operational issues for Smith & Nephew’s orthopedic business in the US remain challenging. Existing issues with low inventory of certain items and the availability and turnover of instrumentation sets in the US were already problematic, but any improvement has been hampered by turnover in the commercial organization in 2023. Management comments on the personnel situation suggest Smith & Nephew has been able to fill most vacancies, and we anticipate productivity of the new sales reps should take hold by early 2025. None of these issues have shifted our view of Smith & Nephew’s narrow economic moat, which remains grounded in surgeon switching costs and intellectual property covering its products.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its hip implants and knee replacements. For example, its Oxinium technology has demonstrated lower rates of revisions in hip replacements. The firm has also commercialized Regeneten, an implant that facilitates the growth of tendon-like tissue.

Smith & Nephew’s fourth-quarter performance offered a solid finish to 2023. With full-year results largely consistent with our expectations and our 2024 estimates bounded by management’s outlook, we’re leaving our assumptions and fair value estimate unchanged, although we plan to adjust the local shares for foreign-currency movement. The firm continues its blocking and tackling that has returned the orthopedics business to growth and bolstered results in sports medicine and advanced woundcare. This remains a work in progress, and we anticipate the firm to reap rewards in 2024 and 2025. We see little to change our view of Smith & Nephew’s narrow economic moat. Though the firm is considerably smaller than rivals Stryker, Zimmer Biomet, and Johnson & Johnson, it still benefits from high switching costs.

Smith & Nephew’s abbreviated third-quarter results displayed solid improvement that leaves the firm on track to meet our full-year revenue expectations. We’re holding steady on our fair value estimate and consider shares of this narrow-moat company undervalued. Quarterly revenue rose 8% in constant currency, driven by strength in trauma and extremities, as well as sports medicine. As seen with other orthopedic devicemakers, Smith & Nephew’s shares came under significant pressure since late summer as investors became preoccupied by knock-on effects of the GLP-1 therapies for weight loss. Considering osteoarthritis is driven by a mix of genetic predisposition, joint trauma, and lifestyle factors influencing wear and tear in addition to weight, we think it’s unlikely that GLP-1 use will substantially reduce the demand for joint replacement. Because arthritis is a progressive disease, we think it’s more likely that GLP-1s could cause some patients to delay the need for joint replacement, but that many of them will eventually undergo procedures.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its pioneering hip resurfacing implant and knee replacements with Verilast technology, which it contends can last for 30 years. These are significant improvements that exceed the evolutionary innovation typically seen in orthopedics.

The uptick in U.S. medical utilization provides a favorable backdrop for medical device firms as the rest of 2023 unfolds. However, we think Smith & Nephew may not be able to fully capitalize on these conditions, as it remains hampered by some operational issues. Despite the near-term speedbumps, Smith & Nephew remains a sizable competitor with attractive businesses that should hold their own over the longer run, and we’re holding steady on our fair value estimate. In particular, Smith & Nephew enjoys intangible assets and switching costs that add up to a narrow economic moat. We’ve seen little to change our thinking there.

With CEO Deepak Nath approaching his one-year anniversary at Smith & Nephew, the firm seems to be making progress on its turnaround plan, though it has yet to manifest itself in higher top-line growth and profitability gains that we think can be maintained. We’re holding steady on our fair value estimate. While economic profits disappeared in 2020 thanks to COVID-19 damping non-urgent procedures, Smith & Nephew has benefited more recently from the resumption of regular procedure volume, launches of key new products that have filled distinct gaps in the portfolio, and improved operations to address demand. These developments and the strength of underlying switching costs and intangible assets give us confidence that the firm’s narrow economic moat remains solid.

Impressive innovation has allowed Smith & Nephew to carve out a slice of the orthopedic, sports medicine, and wound care markets. Though the company is substantially smaller than the dominant orthopedic competitors, it has punched above its weight in terms of introducing meaningful innovation with its pioneering hip resurfacing implant and knee replacements with Verilast technology, which it contends can last for 30 years. These are significant improvements that exceed the evolutionary innovation typically seen in orthopedics.