Smith & Nephew Eyes 31% Upside as Medical Device Sector Stabilizes

A Barron's technical analysis suggests medical device stocks may be reversing a prolonged downturn, with Smith & Nephew (NYSE:SNN) and Glaukos (NYSE:GKOS) showing improved technical setups. The analysis points to a potential 31 percent upside for Smith & Nephew by year-end, targeting a move toward $39 a share as the broader sector shows early signs of stabilization.

"Investors could consider entering here with a potential move toward $39 by year-end, representing roughly 31% upside from current prices," Doug Busch, senior technical analyst at Barron’s Investor Circle, said in a May 13 report. The bullish outlook is supported by the stock attempting to find support near the $30 level, an area that previously acted as resistance.

The iShares Medical Devices ETF (IHI) has lagged the broader healthcare sector, trading 25 percent below its 52-week high and showing prolonged weakness since October 2025. However, recent candlestick patterns, including a doji and a bullish harami, suggest selling pressure may be easing. For Smith & Nephew, a bullish morning star pattern completed on Tuesday, while a potential bullish MACD crossover is developing. The analysis maintains a bullish outlook above $28.50. Glaukos, a standout performer with a 48 percent gain over the last year, is projected to have a 19 percent upside to $162 by late 2026.

This technical optimism comes as Smith & Nephew navigates a complex operating environment. The company's first-quarter 2026 results showed underlying revenue growth of 3.1 percent, meeting market expectations. However, performance was mixed across segments, with the U.S. knee implant business declining 10.3 percent ahead of the planned launch of its new LANDMARK knee system. Management expects growth to accelerate, driven by new products and stabilization in other segments. The company also recently announced a partnership with Veeva Systems (NYSE:VEEV) to modernize its global quality management operations, a move expected to improve operational efficiency.

Knee Weakness Weighs on Orthopaedics

Smith & Nephew's Orthopaedics division, its largest segment, posted modest underlying growth of 0.8 percent in the first quarter. The significant 10.3 percent decline in U.S. knee implants was a "deliberate trade-off" to prepare for the LANDMARK system launch, according to management. This weakness was offset by 5.8 percent growth in U.S. hip implants and strong performance in emerging markets, which grew 10.5 percent. The company's Sports Medicine & ENT and Advanced Wound Management segments delivered underlying growth of 6.7 percent and 2.2 percent, respectively. The firm's innovation strategy appears to be yielding results, with over 50 percent of quarterly growth coming from products launched in the last five years, including the REGENETEN rotator cuff technology.

Technicals and Fundamentals Aligning

The technical case for Smith & Nephew is built on its stock finding a floor at a familiar $30 support/resistance zone. The stock has slipped 13 percent over the last three months but is up 7 percent over the last year. The recent bullish chart patterns coincide with the company's strategic initiatives, including a new $500 million share buyback program and the appointment of a new President of Orthopaedics, Nathan Folkert. For investors, the technical signals highlighted by Barron's, combined with the company's fundamental shifts and product cycle catalysts, suggest a potential inflection point. The stock's performance relative to peers like Globus Medical (NYSE:GMED) and West Pharmaceutical (NYSE:WST) will be a key indicator of whether the recovery can be sustained.

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