Smiths share price gains on ‘buy’ recommendation from Goldman Sachs

Smiths share price gains on ‘buy’ recommendation from Goldman Sachs
Written by:
Michael Harris
29th August 2019

Smiths Group Plc (LON:SMIN) has been the biggest gainer in the FTSE 100 index today, as the company’s shares received recommendation from Goldman Sachs.

The US lender now views Smiths shares as a ”buy”, an improvement from the bank’s previous “neutral” stance. The medical devices and security scanner maker earned the upgrade for its defensive profile and improving free cash flow, financial news outlet ShareCast reported earlier today.

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According to Goldman, Smiths’ defensive profile is attractive given the uncertain economic backdrop. The bank also cited the fact that aftermarket/consumables accounted for more than 50% of Smiths’ revenue and that US dollar exposure was around 50%.

“Further, we believe recent Detection order wins should help to underpin FY20 revenues, John Crane is exposed to more resilient downstream oil & gas opex, and Medical’s growth trajectory should improve following increased investment,” the bank said, as quoted by ShareCast.

The Smiths share price has enjoyed strong gains thanks to the upgrade. As of 16:29 BST, the company’s shares were trading at 1,637.00 GBX apiece, having risen just over 5% since the start of the session, according to Google Finance data. At the time of writing, the company’s total market capitalisation stood at nearly £6.5 billion.

FTSE 100 gains despite Micro Focus slump

While Smiths Group has been the biggest FTSE 100 gainer, other blue-chip firms have also contributed for the index’s positive performance. Other notable risers include Ashtead Group (LON:AHT), whose share price has increased by 4.2% and online grocer Ocado Group (LON:OCDO), which has risen by 4.3%. These hefty gains have helped offset a 32% fall in the share price of software firm Micro Focus International (LON:MCRO), which slashed its full-year sales forecast.

Overall, the FTSE 100 has added nearly 1% in today’s trading and, as of 16:34 BST, its value stood at 7,182.46 points.

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