Is it irrelevant, or will the Upgrade make Smiths’ share price attractive?

• The chart shows Smiths’ share price movements since early October.
• Shares -27.35% from 2018 highs; +4.6% from 2018 lows; -6.5% year-to date
• JP Morgan upgraded Smiths to Overweight, leaving the target price at 1660p.
• Consensus summary: 7 Buys, 10 Holds, 0 Sell; Average target: 1661.33p (Source: Bloomberg).
• Current share price 1392p (at time of writing).
• Will the shares turn back, or will the upgrade push the shares back towards 1517p October highs?
• 14 Nov: Shares are bouncing after company announced it will split off its Medical division.
• 14 Nov: Citi says the plan to split off Smiths Medical is good news, as it will allow management to better focus and grow Smiths Group as an industrial technology entity.

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Trading Smiths – An Example

Let’s say you think that Smiths shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of Smiths using a CFD, at the current price of 1392p. To do this, you need £2,000.

For the purpose of this example, let’s assume the Smiths share price rises to 1517p (+8.9%). Your profit would be £890 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 3% from the current price. Smiths shares fall 3% and hit your stop-loss. Your loss would be £300.

This is provided for information purposes only. It should not be taken as a recommendation.