Smiths Group Shares Upgraded to Buy as Transformation Gains Momentum

Smiths Group shares (LON:SMIN)  climbed 0.23% to 2,576p this morning following a rating upgrade from Berenberg, which moved the industrial engineering group to Buy from Hold and raised its price target to 3,000p from 2,750p.

The upgrade forms part of the German bank's broader 2026 outlook for the capital goods and industrial engineering sectors, reflecting growing confidence in the company's strategic repositioning and robust shareholder return programme.

The shares have delivered impressive returns over the past year, rising 39% over twelve months and gaining 8.6% since the start of 2026. This performance comes as the company executes a comprehensive portfolio transformation aimed at unlocking value and focusing on its highest-performing divisions.

Markets have responded positively to Smiths Group's strategic actions announced in January 2025, when the board outlined plans to concentrate on high-performance industrial technologies, specifically the John Crane and Flex-Tek businesses. The company simultaneously announced intentions to divest Smiths Interconnect and separate Smiths Detection through either a UK demerger or outright sale, marking a decisive shift toward a more focused operational structure.

The divestiture strategy has already begun to materialise. In September 2025, Smiths Group agreed to sell Smiths Interconnect to Molex Electronic Technologies Holdings for £1.3 billion, a transaction that aligns squarely with management's stated goal of streamlining the portfolio whilst generating substantial proceeds for shareholder returns and reinvestment in core operations.

Capital allocation has emerged as a central pillar of the investment case. The board initially approved a £500 million share buyback programme, with £150 million completed by March 2025 and the remaining £350 million targeted for completion by December 2025. In November 2025, following the first-quarter trading update, management announced an additional £1 billion buyback programme set to commence after the initial programme concludes, with substantial completion targeted by the end of 2026.

Operational performance has remained steady throughout this transformation period. The first-quarter trading update released in November 2025 showed organic revenue growth of 3.5% for continuing operations, meeting market expectations. Management reaffirmed full-year guidance of 4-6% organic revenue growth, providing reassurance that the strategic overhaul has not disrupted underlying trading momentum.

Analyst sentiment has strengthened in recent months. Panmure Gordon reiterated a Buy rating in November 2025 with a price target of 2,870p, whilst JPMorgan Chase maintained an Overweight rating in October 2025. These positive assessments contributed to the stock reaching a new twelve-month high of 2,574p in January 2026.

Today's upgrade from Berenberg validates the direction of travel, with the 3,000p price target implying upside of more than 16% from current levels. As the company progresses with its separation plans and deploys significant capital to shareholders, markets appear increasingly confident that Smiths Group's transformation will deliver sustained value creation through 2026 and beyond.