Smith & Nephew Shares Off 6% on Outlook
Medical devices firm Smith & Nephew (S&N) posted a 16 percent rise in quarterly earnings on strong demand for a new hip implant, but its shares tumbled as an unchanged outlook disappointed investors.
Europe's biggest medical device maker on Thursday reported earnings per share before extraordinary items of 12 U.S. cents in the third quarter ended Sept. 30, bang in line with the average of forecasts from analysts polled by Reuters.
S&N, which also makes wound treatments and keyhole surgery instruments, said its full-year revenue outlook was favorable but unchanged from its half-year forecast, helping send its shares down 41-1/2 pence or 6.3 percent to 608p, while the DJ Stoxx European healthcare sector index was up more than 3 percent.
S&N stock had on Wednesday touched a six-month high of around 659p.
Seb Jantet, an analyst at Investec Securities, said the results were as expected but the outlook for the remainder of the year had likely spurred investors to sell off a stock that had run up some 30 pence in the past month.
"I guess the issue is there is nothing in here exciting," he said. "They have had an okay quarter but the guidance is unchanged."
Chief Executive David Illingworth said strong demand for a new hip implant had fuelled the results and said the product took about 2 percentage points of market share in the face of competition from bigger U.S. rival Stryker .
The Birmingham hip was the first of a new kind of less-invasive implant, called hip resurfacing, to be approved by U.S. regulators.
However, Britain's Corin Group recently won U.S. approval for its rival Cormet implant, which will be marketed by Stryker in the United States.
Illingworth said his company's hip business was growing at a 35 percent rate, far outpacing the 8 percent growth of the overall market.
"I would say we are still taking a significant amount of share," Illingworth told a conference call.
Sales in S&N's orthopedic reconstruction business jumped 43 percent to $313 million, while its trauma and CT business posted a 21 percent gain to $156 million. The company's advanced wound unit turned in 8 percent revenue growth to $200 million.
S&N's total revenue rose 24 percent to $845 million against expectations of $824.3 million in the Reuters poll.