Market Report: Investec upgrades artificial hip specialist Smith & Nephew


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Investec is calling for the break-up of the artificial hip specialist Smith & Nephew.

Nicholas Keher at the broker thinks the company is “beginning to look like a growth stock again”, upgrading it to a buy.

But he thinks the expansion of the scale and geography of the business has run its course and the best thing now for shareholders is a three-way split into the three wings of wound management, endoscopy and orthopaedics.

Mr Keher said: “Each division has sufficient scale and market share to operate individually. Moreover, we think each operates with such distinct business models that they require different strategies for capital allocation.” Investors were taken with the talk, sending Smith & Nephew up 21.5p to 921.5p.

The outsourcer G4S was given a fillip by the independent broker Redburn, which thinks the series of scandals that hit the company last year have overshadowed its underlying growth potential. G4S added 5.1p to 237.9p.

Brit Insurance returned to market with a whisper rather than a bang, closing at 226p, below its 240p listing price.

News of an inquiry in the pensions sector saw life insurers knock 8.82 points off the Footsie, but the index was propped up by a buoyant mining sector amid signs that China’s government will act to stimulate growth if necessary. The FTSE 100 added 27.26 points to 6,615.58.

On Aim, a jump in the shares of Bellzone Mining forced it to confirm that one of its investors could be gearing up for a bid. Bellzone said it was in talks  with China Sonangol International Singapore about securing additional equity capital, which “may or may not lead to an offer being made for the company”. Bellzone added 0.2p to 3.22p.

Strategic Natural Resources, hit by litigation in two countries, recovered slightly, up 1.37p at 4.37p, after saying it was “hopeful” of reaching a deal with potential investors.

The property regeneration specialist St Modwen said in a trading statement that is benefiting from the UK’s housing recovery. But there was no word on its New Covent Garden Market project, and St Modwen fell 0.9p to 399.3p.