With Smith & Nephew having reached Panmure Gordon's target price, the broker has downgraded the stock from 'buy' to 'hold' despite it remaining bullish for the group's long-term outlook.

Panmure said that it expects the medical technology firm's full-year results on Thursday to be "largely positive" but doesn't think that the outlook statement will be as strong as consensus forecasts imply - consensus estimates are for 5.4% growth in 2013 revenues.

"For us the thesis has been one of pent up demand in the US market, which admittedly has not yet materialised. The risk to downgrading the stock now is that we may miss that pent up demand," said analyst Savvas Neophytou.

"Yet, the macro remains mixed at best so we cannot imagine the company will issue a thesis-changing outlook statement."

As for 2012, the broker expects S&N to report revenues of $1.14bn, ahead of the consensus estimate of $1.06bn, and a profit before tax of $277m (consensus: $263m).

Neophytou said that the stock currently trading at 14.3 times and 13.6 times 2013 and 2014 earnings, respectively, "putting it towards the top end of its peer group".

The broker has moved its new target price from 680p to 720p.

Shares were down 1.32% at 712p by 11:10 on Tuesday.

BC

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