Smith & Nephew PLC (Smith & Nephew) revenues increased 11% y-o-y in 4Q 09, exceeding our estimate. However, performance at the operating and net level fell short of our expectations. Going forward, we maintain our positive outlook for the company, based on new product launches and improving market conditions. However, at the current price level, the company’s ADR looks fairly valued and we therefore downgrade the ADR from a BUY to a HOLD rating. As we now anticipate a…

Smith & Nephew PLC’s (Smith & Nephew) ADR achieved our target price on 16 November 2009 closing at US$48.67. Although the current market price no longer supports a BUY rating we reiterate our BUY rating based on our positive outlook for the company, supported by our expectation of margin expansion from the company's Earning Improvement Program. We will reassess our target price and rating in our 3Q 09 update report....

Smith and Nephew's revenues were positively impacted by the Negative Pressure Wound Therapy (NWPT) segment which launched RENASYS GO (Portable NWPT), OSTEORAPTOR Anchor (Anchor for repair in hip and shoulder), and VISIONAIRE (for use in total knee replacement surgery) in 1Q 09. We believe this segment will continue to positively impact revenues over the long term. Prevailing weak economic conditions are also expected to pressurize the company's top-line in FY 2009....