Smiths Group' stock is near to a low point of its bullish trend, and may benefit from a major support level to bounce towards its annual highs.

The stock is undervalued with a P/E ratio of 14.2x estimated for 2013 (sector : 19.2x) despite relatively good fundamentals. The growth is healthy and expected to reach an annual rate of 4.3% in the coming years. Net margin is very steady (between 10%-11% every year). The level of debt does not present any worries (financial leverage of 1.23x in 2012).

The trend is bullish in the medium and long term ; weekly moving averages may stop any bearish reversal. Prices are, now, back to the GBp 1300 support level, corresponding to the 100-day moving average. The latter should be used as a stepping stone to reach GBp 1400, in the coming trading sessions.

Thus, a long position can be opened at the current price in order to aim GBp 1400. A stop loss must be set below the GBp 1300 support.