This is despite full-year 2025 results released on 2 March showing its strongest operational performance in a decade. It came on the back of the completion of its three‑year 12‑Point Plan. This fixed supply issues, improved productivity, rationalised the portfolio, and restored growth in the key Orthopaedics division.

Given the disparate factors of a weaker price but stronger business, there could be a significant undervaluation here. 

So, how much is it?

Strong earnings growth ahead

Ultimately, earnings (profits) growth drives any company’s share price higher. A risk to Smith & Nephew is a failure in any of its core products that could be costly to fix and could damage its reputation. Even so, consensus analysts’ forecasts are that its earnings will grow by an average 12.5% a year to end-2028.

This looks well-supported by its recently-released 2025 numbers. These saw trading profit jump 15.5% to $1.2bn (£0.9bn), lifting the trading margin by 160 basis points to 19.7%. This is the strongest profitability Smith & Nephew has delivered in a decade. Meanwhile, revenue rose 6.1% to $6.16bn, as supply constraints eased and execution improved.

Free cash flow surged 52.5% to $840m, reflecting both higher earnings and tighter working‑capital discipline. Return on invested capital also improved to 8.3%, even after absorbing the drag from portfolio rationalisation.

Positive momentum was broad‑based. Orthopaedics returned to growth, supported by improved logistics, stronger surgeon engagement and rising adoption of the CORI robotics platform. Sports Medicine & ENT remained the standout performer, with double‑digit growth in joint repair and strong uptake of REGENETEN and newer anchors and implants.

Management expects a 12%–13% return on invested capital, and a 9%–10% trading profit compound annual growth rate by 2028.

Together these factors point to a business with rising efficiency, expanding margins and a clear pathway to sustained value creation over the medium term.

How undervalued is it?

To gauge Smith & Nephew’s true worth, I ran a discounted cash flow (DCF) analysis. This estimates any firm’s fair value by projecting its future cash flows and then discounting them back to today. It does this using a rate that reflects the risk of owning the shares.

In this case, I used a discount rate of 8.6%, and a perpetual growth rate of 3.2% (the five-year average UK 10-year gilt yield). Other DCF models may use different inputs, which could produce lower valuations.

However, based on these numbers, my modelling suggests Smith & Nephew shares are 28% undervalued at their current £12.46 price.

That implies a fair value of £17.31 — considerably higher than today’s price.

And because asset prices can trade towards their fair value in the long run, it suggests a potentially excellent buying opportunity to consider today if those DCF assumptions hold.

My investment view

Aged over 50 now, I focus on high-yield stocks, which this is not — featuring a yield of 2.3%.

However, they could well suit investors looking for a business with improving profitability, rising cash generation and a credible multi‑year turnaround already showing through in results.

Meanwhile, I have been eyeing other discounted FTSE stocks with a high dividend yield.

The post Down 14% after super-strong 2025 results! Time for me to buy this FTSE med-tech gem? appeared first on The Motley Fool UK.

So how will I go about turning my meagre £50 weekly savings into an income I can comfortably retire on?

Doubling down on dividends

For those who don’t know, dividends are small percentages of an investment paid back to the shareholder as a kind of reward. For example, £1,000 invested in a company with a 7% yield would return £70 annually as a ‘thank you’. You still own your £1,000 worth of shares and now have some extra cash as a bonus.

But the real trick to making dividends work for you is by reinvesting them back into the stock. In this way, you harness the power of compounding returns and skyrocket your portfolio value.

The chart below illustrates how a 7%-returning portfolio can balloon to over £37k in 10 years, with just £26k invested.

This powerfully demonstrates why Einstein allegedly called compound interest “the eighth wonder of the world“. The gains represent a 43% return on invested capital over 10 years — and crucially, the gains will accelerate over time. 

This is why it’s so important to start investing as early as possible.

Sadly, for my goal, I may be a bit late. By my calculations, it would take around 40 years to compound to over £500,000 — the amount needed to return £3,000 a month (at 7%). If my stock picks perform better than expected, I may be lucky — but chances are I’ll need to settle for less.

However, anybody 30 years’ younger could realistically hit this target by retirement.

Long-term risk reduction

I picked a 7% average because I believe it’s a realistically achievable yield. While higher returns may be possible, it increases risk – and I prefer to err on the side of caution. This also applies to my stock picks. Rather than gamble on speculative AI hype stories, I opt for tried-and-tested companies backed by decades of solid performance.

A good example for investors to consider is Smith & Nephew (LSE: SN). Having paid dividends continuously since 1937, its 88 years of uninterrupted payments is one of the longest track records in the UK. The company’s older than the NHS and has stuck to its dividend policy through every market stress since the Great Depression, spanning multiple recessions, wars and economic downturns.

Still, it’s not immune to risk. Facing multiple hip implant lawsuits across the US, it may be hit by unexpected cash settlements, potentially disrupting dividend-supporting earnings growth.

Encouragingly, it enjoys 81% institutional ownership (as of Q2 2025) from big names such as BlackRock (6.5%), Cevian Capital (5.1%) and Vanguard (4.7%). These are not fly-by-night buyers — they’re deep-value investors with rigorous due diligence processes. Their commitment signals extraordinary confidence in the business.

The importance of diversification

While Smith & Nephew exhibits long-term reliability, its yield seldom rises above 3% (doing little to support my 7% average). That’s why it’s important to diversify, balancing low-risk options with some sustainable high-yielders.

Legal & General, M&G, Investec and British American Tobacco are some examples of high-yielders with long track records of reliable returns. And they’re just a few of the options that look appealing this month.

The post How I’m targeting £3,000 a month in passive income with just £50 a week appeared first on The Motley Fool UK.

Here, I’m going to highlight three UK stocks that are reliable dividend payers. Could they be worth considering for 2026 and beyond?

The high yielder

First up, we have a high-yielder, M&G (LSE: MNG). It’s a leading savings and insurance company that has millions of customers worldwide.

This company has paid a dividend every year since 2020, shortly after it was split off from Prudential. Currently, the yield is about 7.5% – miles higher than the Footsie average.

One thing I like about this company from an investment perspective is that it looks well-placed from several long-term trends. Some examples include the rising focus on retirement saving and the increasing focus on private markets investments.

I also like the fact that the share price is on the up. If this trend stays in place, there could be some gains on offer too.

Of course, this company does operate in a very competitive industry and is up against some much larger players. All things considered though, I believe the shares are worth a look.

A defensive dividend growth stock

The next stock I want to highlight is Coke bottling partner Coca Cola HBC (LSE: CCH). This one’s a little more defensive in nature. Whereas financial services can be volatile at times, demand for soft drinks tends to remain pretty stable throughout the economic cycle.

This company’s paid a dividend every year since 2016. Currently, the yield’s about 3.2%.

What I like about this stock, aside from its defensive qualities, is that the dividend’s rising at a rapid rate. Since the first one in 2016, the payout’s risen from 40 euro cents per share to €1.03 per share.

Looking ahead, analysts expect the dividend to keep rising. It’s worth noting that the dividend coverage ratio (the ratio of earnings to dividends) is over two so there’s plenty of space for growth.

In the long run, a risk here is changing consumer tastes and preferences. However, I don’t think demand for Coke’s suddenly going to drop off so I believe the shares are worth considering.

The long-term hero

Finally, we have orthopaedics company Smith & Nephew (LSE: SN.). This is a company with a really impressive dividend track record. Believe it or not, it’s paid a dividend every year since 1937. At present the yield’s about 2.8%.

Now, compared to some other Footsie stocks, the yield’s a little underwhelming. But in terms of total returns (gains plus income), I see a lot of potential here.

Right now, this stock looks undervalued. As a result, analysts see the potential for double-digit share price gains over the next year or so.

If the stock was to rise by that amount, investors could be looking at attractive returns. There are no guarantees it will, of course – the company will need to generate solid growth in the near term to see its share price rise, and it may not.

Recently however, it unveiled a new growth strategy so I’m optimistic about its prospects. I think it could do well in 2026 and is worthy of further research.

The post 3 UK stocks to consider buying for reliable dividend income in 2026 appeared first on The Motley Fool UK.

Should investors consider buying these shares after this weakness? Let’s discuss.

Insiders are buying Smith & Nephew

Let’s start with Smith & Nephew. Because I think there could be an opportunity here.

This stock fell after the company put out a Q3 trading update on Thursday (6 November). However, while the update wasn’t mind-blowing, it wasn’t terrible.

For Q3, underlying revenue was up 5%. And looking ahead, the company said that it’s expecting 5% growth for the full year.

I think investors were just looking for more here (after strong results from rivals). That’s why the share price fell.

Now, it’s worth noting that since the share price fell, two company directors have stepped up to buy stock (one bought around £450k worth of shares). This suggests that they see potential for a rebound.

Add the fact that the stock trades on a price-to-earnings (P/E) ratio of 13 and offers a dividend yield of nearly 3% and I think it’s worth a closer look right now. That said, competition from bigger, more powerful rivals is a risk.

Rightmove is offering quality at a reasonable price

Turning to Rightmove, it posted a trading statement on Friday. And this sent the share price into freefall (it was down 28% at one stage).

The reason why was that the company said that it’s going to ramp up its spending on artificial intelligence (AI) in the years ahead. As a result, it only expects 3%-5% profit growth next year (on revenue growth of 8%-10%).

Investors were obviously disappointed with the profit guidance. I think there was also scepticism in relation to the AI spending.

Is this stock an attractive proposition to consider after the fall? I think so.

Even with the lower profit guidance, I put the P/E ratio at under 20. That’s low for a company of this quality.

That said, a risk here is disruption from ChatGPT (which could potentially cut out platforms like Rightmove). This is something to keep an eye on.

IAG looks cheap

Finally, zooming in on IAG, it also put out a trading statement (for Q3) on Friday. Here, numbers were a little disappointing.

For the quarter, revenue was flat year on year. Meanwhile, operating profit was only up 2%.

One problem for the airline operator was that travel to the US was relatively weak. This is an issue I warned about back in May.

So, is there any opportunity here for investors? Possibly – the stock does look cheap right now (the P/E ratio is only six).

However, I reckon there are probably better opportunities in the market today. Especially now that consumer spending is starting to show signs of weakness (which could lead to less demand for long haul flights).

To my mind, this stock is quite risky. Some of my colleagues here at The Motley Fool are bullish on it though.

The post Should investors consider buying last week’s FTSE 100 losers IAG, Rightmove, and Smith & Nephew? appeared first on The Motley Fool UK.

Playing around with ChatGPT and other generative artificial intelligence (AI) tools can be fun, but I don’t take the results too seriously.

Picking FTSE 100 stocks

That said, I thought I’d give it a whirl, and asked ChatGPT to list ‘five of the best UK shares to consider buying today’. Here’s what it came up with, and it’s reasoning.

London Stock Exchange Group. Its share price is down about 20% in the past year, yet analysts see growth ahead in its data and analytics division.

Babcock International Group. This defence contractor has raised profit targets and benefits from stronger UK and NATO military spending.

Rio Tinto. A major mining company offering a near-6% dividend yield with exposure to commodities in demand, which could appeal in a more inflation-sensitive environment.

Tesco. The grocery retailer has been gaining market share, suggesting resilience and cash-flow strength.

Smith & Nephew (LSE: SN). A medical-devices company undergoing a turnaround, with a strong buy-back programme and improving results.

ChatGPT also suggested “doing deeper research, looking at recent results, valuation, debt levels and dividend sustainability before making any move”. And I’ll certainly be doing that, because I’m not convinced by its choices.

First, they’re not really its choices. They were all lifted from the web, taken from articles written by actual humans. Ironically, the tip that impressed me most, London Stock Exchange Group, turned out to be from The Motley Fool!

Brilliant growth stock

I’ve personally bought the stock twice in recent weeks, because I think it’s a brilliant opportunity. So does Fool writer Dr James Fox. He wrote the article ChatGPTs quoting.

Personally, I’d rather read an investment writer’s reasoned thinking than a one sentence précis from a chatbot. But that’s just me.

Picking a stock is a complex decision, with risks and rewards to consider, and handing to a AI just isn’t on. Investors have to make their own decisions because they’re the ones who’ll make the gains or suffer the losses.

I’m wary of ChatGPT’s second pick, defence firm Babcock, whose shares are up a blockbuster 362% over five years. It may struggle to maintain that momentum, something ChatGPT doesn’t allow for. The Tesco share price has more than doubled in five years, and may also slow from here. Not mentioned.

Smith & Nephew in recovery

Smith & Nephew intrigues me though. The shares are up 20% in the last year, but trade only slightly above their level 10 years ago. I expected them to be cheap, but in fact it has a price-to-earnings ratio of 21.5, well above the FTSE 100 average of 15.

None of which ChatGPT mentions. On 5 August, Smith & Nephew reported robust first-half results with revenue, profit and cash generation all improving significantly, and unveiled plans for a $500m share buyback, as mentioned.

Operating profit rose 30.6% to $429m, while cash generated from operations jumped 54.3% to $568m. Smith & Nephew’s worth considering today, but also has risks, including US tariffs and operational challenges in China.

Overall, I was impressed by the pick. Then I saw where ChatGPT got it from. The Motley Fool again! In future, I’ll cut out the middleman. And make my own choices.

The post I asked ChatGPT to name the 5 best UK shares to consider buying today and it came up with this…  appeared first on The Motley Fool UK.

Earlier this week, I screened the UK market for stocks with these same attributes. Here are three names that popped up and look really interesting to me right now (albeit the term ‘best’ is always subjective).

A recovery story

First up, we have Smith & Nephew (LSE: SN.), a leader in joint replacement technology. I have a substantial position in this FTSE 100 stock, and I really like the set-up right now.

After years of underwhelming results, Smith & Nephew’s performance is starting to improve thanks to a transformation plan implemented by CEO Deepak Nath. Earlier this month, the company produced strong H1 results and announced a $500m share buyback.

As for the ‘technicals’ (the share price action), they look great. Currently, the shares are in an uptrend – near 52-weeks highs – but still miles below their all-time highs meaning there’s potential for further gains.

Of course, there are risks here. Operational challenges in China – where the Volume-Based Procurement programme has created challenges – is one.

With the stock trading on a relatively low forward-looking price-to-earnings (P/E) ratio of 15 however, I like the look of it and believe it’s worth considering.

A strong uptrend

Next, we have Prudential (LSE: PRU), the FTSE 100 insurance company that’s focused on serving customers in Asia and Africa.

This is another stock I’m invested in. And like Smith & Nephew, I see a lot of potential here.

Prudential shares have been a big disappointment in recent years due to economic weakness in China. However, Q1 results showed that performance is starting to pick up, with new business profit growth of 12%.

Turning to the technicals, they look excellent. At present, the share price is in a really strong uptrend.

It’s worth noting that Prudential hasn’t posted its H1 results yet. They come next week and there’s a chance they could create some share price volatility.

I’d look at share price weakness as a buying opportunity however. This company has a lot of long-term potential due to the markets it serves and I think it’s worth looking at while it’s still well below its highs.

Multiple growth drivers

Finally, we have global banking giant Barclays (LSE: BARC). Now, this isn’t a stock I own, but I do think it looks quite interesting right now.

I like Barclays because the bank has significant exposure to both investment banking and trading. This could pay off in the months and years ahead.

With interest rates coming down, activity in the capital markets is starting to pick up. Meanwhile, with Donald Trump in the White House, equity markets are likely to be volatile, creating plenty of opportunities for Barclays’ traders.

Turning to the share price trend, it looks attractive. Currently, the shares have strong upward momentum. The valuation looks attractive too. At present, the P/E ratio here’s only nine.

I’ll point out that economic weakness is a risk with bank stocks like Barclays. This is a possibility in the months ahead.

I think the stock deserves further research however. With multiple growth drivers and a low valuation, there’s a lot to like.

The post I think these could be 3 of the ‘best’ stocks in the UK market today appeared first on The Motley Fool UK.

In fact, some are comfortably outpacing the pack. So I’ve identified two FTSE 100 stocks to consider that not only hold their own but are also making significant moves this year. That said, for now, I prefer one to the other.

Airtel Africa

Airtel Africa‘s (LSE: AAF) a wireless telecommunications provider serving 14 countries across the continent. It’s not a household name in Britain, but its share price performance has been impossible to ignore.

After posting better-than-expected quarterly results in July, the stock surged to a record high of 194.9p. Operating profit climbed 33% in Q1 to $446m, fuelling a rally that’s seen the stock jump 90% since January. That’s nine times the return of the S&P 500.

Even against US giants, Airtel Africa looks impressive. AT&T‘s up 26% this year, Verizon, just 10%. Forecasts suggest the company’s earnings per share could triple over the next three years, while revenue may reach £6.55bn by 2028.

The growth story’s compelling, but there are risks. Airtel Africa carries significant foreign-currency debt. A sharp devaluation of the Nigerian naira or other local currencies could inflate repayment costs and dent earnings. Volatility’s therefore part of the package.

Still, with Africa’s wireless and mobile data markets expanding rapidly, I see this as a growth stock with long-term potential.

Smith & Nephew

Smith & Nephew (LSE: SN.) develops implants for joint repair and advanced wound care solutions. Earlier this month, the firm unveiled half-year trading results that delivered a pleasant surprise. Trading profit rose 11.2%, and a £500m share buyback programme was announced. Investors responded with enthusiasm.

So far in 2025, shares are up 36% — triple the S&P 500’s return. Against US peers, it’s in an even stronger position. Stryker‘s up just 5.36% while Zimmer‘s actually fallen 3.5%. On valuation, the stock also looks cheap, with a price-to-earnings growth (PEG) ratio of only 0.56.

What stands out is the operational progress. Earnings have surged 55% and net margins have widened to 7% from 4.7%, showing the impact of cost efficiencies. Debt’s well-covered, cash flow looks strong and analysts at Jefferies even called it a safe-haven stock in the face of wider tariff concerns.

That said, there are some risks. Return on capital employed (ROCE) has fallen sharply over the past five years, from 14% to just 6%, and its orthopaedics division’s been losing market share in the US. This raises concerns about long-term competitiveness.

While I think Smith & Nephew’s defensive qualities are attractive and make it one to think about, I want to see improvements in efficiency and market share before seeing it as a long-term winner.

The bottom line

The FTSE 100’s been stepping up in 2025, and these two UK shares prove it. Airtel Africa looks like a high-growth play on a booming market, albeit with currency risks. Smith & Nephew meanwhile, offers resilience and solid cash flow but needs to tackle some structural challenges.

Either way, it’s refreshing to see UK shares not just keeping up with the S&P 500 but overtaking it in certain areas.

The post These soaring UK shares are smashing the S&P 500 appeared first on The Motley Fool UK.

Trading profit jumped 11.2% year on year to $523m (£393m), outstripping analysts’ forecasts of $496m. Over the same period, revenue was up 4.7%, to $2.961bn. Revenue is the total income made by a firm, while profit is what is left after expenses are deducted.

Its operating profit margin jumped 25% to 14.5%, and its earnings per share (EPS) soared 36.6% to 33.5 cents.

Cash generated from operations climbed 54.3% to $568m, while free cash flow rocketed 528.3% to $244m.

Key drivers behind the figures

These strong figures were broadly driven by a strong recovery in US demand offsetting weaker demand in China.

A fourth consecutive quarter of improvement was seen in the US’s daily sales for the firm’s Reconstruction & Robotics division. And new products launched in the last five years accounted for three-quarters of the firm’s H1 growth.

China remains a risk for profits, as the country continues its rollout of its Volume Based Procurement (VBP) programme. In this, the government bulk-buys drugs via tenders to secure the lowest prices.

Consequently, Smith & Nephew must increase production to drive revenue higher there, which will take time. The company expects the VBP effect to continue this year.

That said, consensus analysts’ expectations are that the firm’s profits will grow by 14.8% a year to end-2027. It is this growth that drives any firm’s share price and dividends higher over the long term.

Additionally positive in the H1 release was the announcement of a $500m share buyback for H2. These programmes tend to support stock price gains.

Is there value left in the shares?

I am never bothered by a big rise or fall in a share price in and of itself. This is because a stock’s price and its value are not the same thing at all.

The former is simply whatever the market will pay for it at any given moment. But the latter reflects the true worth of the firm, based on its underlying fundamentals. So, it is only with value that I am concerned.

I have found the best method of ascertaining this is through discounted cash flow (DCF) modelling. Basically, what this does is to pinpoint where any firm’s shares should be trading, based on future cash flow forecasts for the underlying business.

In Smith & Nephew’s case, the DCF shows that the shares are 37% undervalued at their current £13.41 price.

Therefore, their fair value is technically £21.29.

Will I buy the stock?

The one and only reason why I have not bought the shares is the lack of the dividend yield I want.

Aged over 50 now, I am focused on stocks that generate a yield of 7% or over. This is because I intend to increasingly live off the dividends as I continue to reduce my working commitments.

Why 7%? Because the risk-free rate (the UK 10-year gilt yield) is 4.5%, and shares have risks attached.

Smith & Nephew’s dividend yield is presently 2.2%.

That said, for investors for whom this is not an issue, I think Smith & Nephew shares are worth serious consideration.

The post After an 11% rise in H1 profits, is it time for investors to consider this FTSE 100 medi-tech giant? appeared first on The Motley Fool UK.

While that’s a big gain, I reckon there’s more to come from this stock. Here’s why I reckon it’s just getting started.

This stock has been a dog

This Footsie stock has been weak for a few years now (I’d know because I hold it in my ISA). Up until a few months ago, it was trading around 50% below its pre-Covid highs.

This underperformance has been down to a few factors including a slower-than-expected recovery in orthopaedic surgery demand (Smith & Nephew specialises in joint replacement technology), issues in China, and tariff uncertainty.

However, the company has been making moves to improve its financial performance. And these moves appear to be paying off.

Brilliant H1 results

In its first-half results today, the company reported year-on-year revenue growth of a healthy 6.7%. Breaking this down, orthopaedics saw 5% growth, sports medicine and ENT delivered 5.7% growth, and advanced wound management registered 10.2% growth.

Profitability numbers were even better. Here, operating profit was up 30.6% year on year while operating profit margin climbed to 14.5% from 11.6%.

On the back of these results, the company raised its dividend by an inflation-beating 4%. It also announced a share buyback of $500m, which is quite significant given that the company’s market cap is only about £11.5bn.

“The operational improvements we have made under the 12-Point Plan are increasingly translating into better financial performance. There is more to be done, but the transformation of Smith & Nephew is starting to deliver substantial value.”
CEO Deepak Nath

More to come

Now, looking at the long-term set-up here, I see the potential for more gains from Smith & Nephew shares. Because this company is very well placed to benefit from changing global demographics.

By 2030, one in six people globally are expected to be 60 or older, according to the World Health Organisation (WHO). In the US (a huge market for Smith & Nephew), one in five people are expected to be over 65 by the same year.

This demographic shift is likely to significantly increase demand for orthopaedic surgeries and related technologies (our joints break down as we get older). So, the company looks very well positioned for long-term growth.

I also wouldn’t be surprised to see a takeover here. The valuation remains quite low for a medical technology business and I think this company could appeal to a range of larger healthcare organisations in the US.

Of course, there are no guarantees that the stock will continue to perform. US tariffs are a risk in the short term while new technologies like GLP-1 weight-loss drugs are a risk in the long run.

I like the set-up though. With the stock still well below its pre-Covid highs, I think it’s worth considering today.

The post The Smith & Nephew share price is up 14% today. Here’s why the FTSE 100 stock could be just getting started appeared first on The Motley Fool UK.

The company — whose products include joint implants and wound care treatments — has swept higher after announcing forecast-beating profits for the first half. Not only that, but its data showed sales rapidly gain momentum as the period wore on.

Smith & Nephew shares are now trading at their most expensive since February 2022. Is the Footsie business a great turnaround stock for investors to buy? Or is it now looking too expensive?

Another forecast beat

The first half saw another standout sales performance as restructuring efforts rolled on. Revenues were up 5% on an underlying basis, at $3bn, with growth speeding up to 6.7% in Q2 from 3.1% in Q1.

Trading profit was up 11.2%, at $523m, while trading profit margin rose 100 basis points to 17.7%. This was driven by “revenue leverage and accelerated operational savings“, Smith & Nephew said.

Operating profit soared 30.6% to $429m.

Cash generated from operations rose 54.3% to $568m, while free cash flow soared to $244m from $39m in the same 2024 period.

Reflecting this cash boost, the company raised the interim dividend 4.2% year on year, to 15 US cents per share. It also announced a $500m share buyback to commence in the second half of 2025.

Broad strength

Smith & Nephew maintained full-year guidance, but as today’s share price jump shows, those first-half results were nothing short of exceptional.

Each of the company’s regions and divisions delivered handsomely. Orthopaedics sales were up 5% on an underlying basis, at $615m. Sales at Sports Medicine and ENT, and Advanced Wound Management were up 5.7% and 10.2% respectively, at $479m and $459m.

For the full year, it expects to deliver underlying revenue growth of 5%, thanks to “[a] continued higher cadence of product launches and clinical evidence to underpin further growth“.

Trading profit margin’s tipped at between 19% and 20% as the firm’s ’12-Point Plan’ restructuring initiative continues.

What next?

Smith & Nephew’s transformation strategy launched in 2022 is delivering the goods pretty nicely. Steps to improve efficiency are paying off, while sales at Sports Medicine and ENT, and Advanced Wound Management are getting better.

Efforts to fix the underperforming Orthopaedics unit are also showing signs of promise. Though it’s important to note too that performance here remains mixed — in the key US market, hip implants were up 7.4% in the first half but knee implants fell 1.5%.

Tuesday’s update marks the second successive quarterly beat. As a consequence, Smith & Nephew’s shares are up by a third in 2025. Investors are hoping the company is shaping up to finally be in a strong place to capitalise on rising healthcare demand as global populations rapidly age. This is an enormous growth opportunity.

However, it’s also important to remember that risks to its turnaround still loom. Trade tariffs are taking a bite out of the bottom line. An economic downturn in the US, and recent changes to procurement policy in China, are other threats.

On balance, I think Smith & Nephew shares are worth serious consideration today. Its price-to-earnings (P/E) ratio has risen to 16.5 times, though it’s still below the 10-year average of 18 times.

The post This FTSE 100 share’s rocketed 15% today! Is it a top momentum stock to buy? appeared first on The Motley Fool UK.