Smith & Nephew sticks to forecast despite third-quarter miss

LONDON (Reuters) - Smith & Nephew Plc (SN.L), Europe's biggest maker of artificial hips and knees, stuck with its forecast for a higher trading profit margin this year after its third-quarter revenue fell short of market expectations, hitting its shares.

Smith & Nephew said that underlying revenue rose 4 percent to $1.105 billion (724 million pounds) helped by growing demand for knee implants and a strong U.S. performance, but that came in 1.9 percent lower than a consensus forecast of $1.126 billion.

Shares in the FTSE 100 company lost 5.8 percent to 1,083 pence in early trading, sinking to their lowest level for two months.

Jefferies analyst Martin Brunninger said that sales in both Smith & Nephew's advanced surgical devices and advanced wound management units both came in below his estimates.

"They've missed across the board and they have done an acquisition which could be seen as expensive," he said.

The company on Thursday said it had agreed to buy Blue Belt Holdings Inc for $275 million, securing a foothold in orthopaedic robotics-assisted surgery, which it predicted would be used more widely in future.

Smith & Nephew reiterated its targets for delivering higher underlying revenue growth in 2015 than in 2014 and an improvement in trading profit margin.

"We had a good quarter in the United States, our largest market, and are successfully stabilising our European business which delivered a second consecutive quarter of revenue growth against a market backdrop that remains challenging," said Chief Executive Olivier Bohuon.

Brunninger said that in the longer-term the Blue Belt acquisition made sense.

"The world doesn't really need any more knees and hips - there are too many systems on the market already. However if you add a system that will facilitate the procedure, that's something that surgeons need and want today," he said.

(Reporting by Sarah Young, Editing by Paul Sandle)