Analyst Note
| Debbie S. Wang |While we generally applaud narrow-moat Smith & Nephew’s recent strategic decisions and operational efforts, we’re still not highly confident that this midsize competitor will be able to thrive in a market that has become more and more highly consolidated, especially as hospital customers have sought to leverage volume purchases with fewer vendors. We’ve seen little in recent results to shift our intrinsic value, though we’re mindful that increasing transmission of the delta variant could put pressure on the resumption of elective procedure volume in localized geographies as we head into the fall. If this comes to pass, it would knock roughly $1 off our $43 fair value estimate.