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Dresdner Kleinwort analyst flummoxed by Smith & Nephew’s erratic form

by Rachel Robson

Whether it was a case of indecisiveness, or a hasty correction, Chris Donnellan of Dresdner Kleinwort has been chopping and changing his mind about Smith & Nephew, switching his recommendation from ‘buy’ to ‘add’ and then back to ‘buy’ in just a matter of days.

Unfortunately, due to ‘company policy’, Donnellan could not comment on his change of mind, but perhaps Smith & Nephew’s Q1 results were a little worse than he had initially anticipated. The day before figures were published, Donnellan indicated that they were likely to be impacted by a number of issues, although full-year results were unlikely to be affected.

Donnellan downgraded the stock to ‘add’ on the back of the recent strong share price performance. However, following news that unacceptable sales practices at its Plus subsidiary would reduce Smith & Nephew’s full-year sales by $100 million, and the subsequent fall in share price, Donnellan upgraded the stock back to ‘buy’. At the same time, however, his target price was slashed to 650p from 730p.