Can FTSE 100 engineering firm Smiths Group (LON:SMIN) shake-off its recent slump following next week’s full year results?
They’ve been a fair amount of ups and downs for Smiths in 2018. Opening at £14.81 it had shot ip to £16.90 towards the end of January, only to tumble under £14 in late-March following its interim report. From here it when on its best run of the year so far, eventually striking £18 for the first time in its history in mid-June. Yet it got into trouble as the summer went on, with July’s trading statement helping to send Smiths Group PLC to a current trading price, and near 5 month low, of £15.73.
What was so objectionable, then, about that aforementioned July update? While the group said it had returned to growth ‘with revenue for the 11 months ended 30 June up 3%’ on an underlying basis – pointing to ‘good performances’ from John Crance, Smiths Detection, Smiths Interconnect and Flex-Tek – there was troubles at its largest division, the Smiths Medical.
Some of the business’ products have been temporarily suspended in Europe in advance of the new EU Medical Device Regulation in 2020. This, alongside the loss of 2 US contracts, means the division’s revenue is expected to be down 2% for the full year.
There’s been more attention paid to Smiths Medical since September began, with reports suggesting that US firm ICU Medical – who Smiths came close to merging with earlier in the year – had offered £2.8 billion for the division. And while that offer was rejected, it is unclear how things stand between the 2 companies at present.
Investors will be after an update on those discussions when the company reports its full year results on Friday 21st September. They’ll also want to hear the guidance for 2018/19, and whether the Medical division – if it is still about – will recover any time soon.
Smiths Group PLC(LON:SMIN) has a consensus rating of ‘Buy’ alongside an average target price of £17.31.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.