Let's be honest about the medical device world for a second. It's usually a bit of a snooze-fest for investors looking for "moonshot" returns, but Smith & Nephew has been a total rollercoaster lately. If you've been watching the smith and nephew stock price over the last year, you know exactly what I mean. One day they're announcing a massive efficiency plan, the next day they're taking a $200 million hit to clean up their inventory.
Basically, the company is in the middle of a massive identity shift. They’re trying to move from being "the guys with the reliable but old-school knee implants" to a high-tech robotics and sports medicine powerhouse. As of mid-January 2026, the stock has been hovering around the $32.70 mark (ticker SNN on the NYSE), coming off a year where they actually performed pretty decently—up about 30% over the last 12 months. But if you’re looking at the London listing (SN.L), you’ve seen some chop as analysts start to worry if the 2026 targets are maybe just a little too optimistic.
What’s actually driving the smith and nephew stock price right now?
It really comes down to three things: knees, robots, and a very ambitious guy named Deepak Nath.
When Nath took over as CEO, he inherited a bit of a mess. The supply chain was a disaster, and they were losing ground to giants like Stryker. He launched the "12-Point Plan," which was basically a fancy way of saying "let's stop being inefficient." They've finished that now and moved into a new phase they’re calling "RISE."
But here’s the kicker. Even though they’re doing better, the market is still skeptical. RBC Capital recently downgraded the stock from "outperform" to "sector perform." Why? Because they think the "recovery story" is already baked into the price. They’re worried that while the company is aiming for 6% revenue growth in 2026, there’s a real risk they might miss it.
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The "CORI" factor
The shining star in their portfolio is the CORI Surgical System. It’s a handheld robotic platform for knee and hip replacements. Unlike some of their competitors' systems that require a giant, expensive robot that takes up half the operating room, CORI is smaller. This makes it a huge hit in Ambulatory Surgery Centers (ASCs)—basically those outpatient clinics that are popping up everywhere in the US.
In the last quarter, their "Other Reconstruction" segment (which includes robotics) grew by nearly 10%. That’s a big deal. When hospitals buy a robot, they’re locked into that company’s implants for years. It’s the "razor and blade" model, and it's the main reason why some investors think the smith and nephew stock price has plenty of room to grow if they can keep stealing market share in the ASC space.
The China problem and the inventory "cleanup"
It hasn't been all sunshine and robots, though. China has been a massive headache for the entire med-tech industry. The government there has been doing these "Volume-Based Procurements," which is basically a polite way of saying they’re forcing companies to slash their prices to stay in the game. Smith & Nephew saw their knee implant growth in the US struggle (down about 2.3% recently) because they’re busy phasing out older products, but the weakness in China added another layer of pain.
To fix the business, they're doing something pretty bold. They are cutting about $500 million worth of "SKUs"—that’s just industry speak for different types of products. They realized they were making too many versions of the same thing.
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- They’re taking a $200 million non-cash hit in their 2025 accounts to clear this out.
- The goal? To be leaner by the time 2027 rolls around.
- Honestly, it's a "short-term pain for long-term gain" move.
By the numbers: A quick reality check
If you’re looking at the fundamentals, the forward P/E ratio is sitting around 14x for 2026. Compare that to their ten-year average of about 17.4x, and you could argue the stock is actually undervalued. Plus, they’re offering a dividend yield of around 2.3% to 2.7%. It’s not a "get rich quick" stock, but for someone looking for a steady healthcare play that’s actually trying to innovate, it's interesting.
Why 2026 is the "prove it" year
Most of the big banks, like Citi and JP Morgan, are watching the margin expansion. The company thinks they can get their trading profit margin up to 19.5% or even 20%. That would be a huge jump from where they were a couple of years ago.
But there are headwinds. We’re talking about:
- Tariffs: They’re expecting a $15-$20 million hit from tariffs in 2025, which will likely get worse in 2026.
- Competition: Stryker’s Mako robot is still the "800-pound gorilla" in the room. Smith & Nephew is the scrappy underdog here.
- Execution: They’ve promised big things before and missed. Investors have long memories.
Actionable insights: What should you do?
If you're holding the stock or thinking about jumping in, don't just look at the daily price movements. They don't tell the whole story.
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First, keep an eye on the March 2, 2026 earnings call. That’s when they’ll confirm the full-year guidance for 2026. If they stick to that 6% growth target and the margins look solid, the stock could catch a bid. If they soften that guidance, expect a sell-off.
Second, watch the US Hip Implant data. Their new "CATALYSTEM" hip system has been a surprise winner, growing 6.3% in the US recently. If they can replicate that success in other markets like Japan and Europe, it provides a nice cushion while they fix the knee business.
Finally, consider the "Free Cash Flow" target. They’re aiming for $1 billion in annual free cash flow by 2028. If they can even get close to $800 million this year, it gives them the firepower for more share buybacks—like the $500 million one they just finished—or more smart acquisitions like the Integrity Orthopaedics deal.
Basically, Smith & Nephew is no longer a "broken" company; it's a "fixing" company. Whether the smith and nephew stock price reflects that fix yet depends on if you believe management can actually deliver on their "RISE" strategy without hitting any more speed bumps in China or the US supply chain.
Next Steps for Investors:
Review your exposure to the medical device sector and compare Smith & Nephew’s 14x forward P/E against competitors like Zimmer Biomet or Stryker to see if the valuation gap makes sense for your risk tolerance. Keep a close watch on the March 2026 results to see if the inventory rationalization is truly a "one-off" or a sign of deeper structural issues.