Why I think FTSE 100 medical tech stock Smith & Nephew looks a good investment

first_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address Simply click below to discover how you can take advantage of this. Why I think FTSE 100 medical tech stock Smith & Nephew looks a good investment FTSE 100 medical technology stock Smith & Nephew (LSE:SN) is an international brand that’s been around for 165 years. While some healthcare stocks have thrived during the pandemic, Smith & Nephew has struggled. It provides replacement prosthetic hips and knees for operations. And with most elective surgery postponed or cancelled recently, the company has lost orders and reduced its revenue. Kirsteen Mackay | Thursday, 25th February, 2021 | More on: SN I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Our 6 ‘Best Buys Now’ Shares I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Short-term strugglesNevertheless, when considering the bigger picture, I think it’s easy to see that this is a short-term problem. I believe surgery is going to return with a vengeance and the FTSE 100 company will pick up again. With the NHS facing a massive backlog (around five years waiting time for a knee or hip replacement), I think more and more patients will opt for private surgery.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Its full-year 2020 results released last week were disappointing, causing the stock to fall 5% and making it the worst performer in the FTSE 100 index. In Q4, Smith & Nephew’s revenue fell 7% on an underlying basis. Full-year revenue for 2020 was $4.5bn, an underlying drop of 12%. Its trading profit margin was 15%, which was affected by lower gross margins, increased research and development and general costs. Meanwhile, cash generated from operations fell 29%.Although further lockdowns were disappointing for Q4, the slowdown was less severe than in Q2. That’s because it was less of a shock and the healthcare system had adapted to manage a lower level of elective surgeries while maintaining Covid-19 safe practice.There’s strength in the FTSE 100The good news is, it’s still paying a dividend, making acquisitions and investing in R&D. And in the year ahead, its focus is on recapturing its pre-pandemic momentum. Recovery is likely to be slow in the first half of this year. But hopefully this will pick up pace going into 2022.Smith & Nephew has launched its CORI robotics system to a positive response. It’s also enjoying vigorous growth in Sports Medicine Joint Repair with its REGENETEN Bioinductive Implant for tendon repair. This product and another called NOVOSTITCH are doing well in the US and have yet to roll out in other markets, meaning potential for increased revenues is present across the company portfolio.In January it completed its $240m acquisition of Extremity Orthopaedics business of Integra LifeSciences Holdings. This comes a year after its Tusker Medical acquisition. This division operates Tula, an innovative system to treat recurrent or persistent ear infections, particularly in children.Smith & Nephew’s financial positionThe company has a £12.5bn market cap. It has a price-to-earnings ratio (P/E) of 39, and earnings per share are 36p. With a strong balance sheet, the company felt confident in maintaining its progressive dividend policy. Its full-year distribution is 37.5¢ (27p) per share, which gives a yield of 1.9%.Smith & Nephew has access to committed debt facilities of $4.5bn for around five years. Debt due this year amounts to $265m.The high P/E shows many shareholders already feel bullish towards this stock. I feel that way too and would like to own shares in Smith & Nephew. Recovery could be slow, there’s a road map out of the pandemic, but no guarantees on the timeline. As a long-term investment, I think this FTSE 100 stalwart has what it takes to go the distance. I imagine when Smith & Nephew’s share price recovery comes, it will be swift, and I’d like to be a shareholder before that happens. See all posts by Kirsteen Mackay Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images. Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. “This Stock Could Be Like Buying Amazon in 1997”last_img