An activist investor has reignited debate over a proposed Smiths break-up and potential upside in such a scenario. We examine possible outcomes and conclude that while a breakup makes sense on paper it might at best produce only c10% upside at this point. We reiterate our Neutral rating. Will much value be unlocked in a break-up? We are not convinced Following a letter from US activist investor Engine Capital (per the FT, see here) investors are once again considering whether Smiths'' four divisions might be worth more separated. We don''t see significant upside at present, with challenges in finding suitable buyers for John Crane and Detection due to antitrust concerns. While John Crane might be spun successfully (perhaps at c14.5x EBIT) we think that Detection and Interconnect are unlikely to fetch rich multiples in a sale. In all, we only see c10% upside in a break-up today and expect any process would be lengthy and uncertain - it took c38 months to close the sale of Medical once separated (granted Covid delayed proceedings). Smiths has not just been ''underappreciated'' - we think other factors are at play Recent organic sales growth, while strong, was in part driven by inflationary pressures and off a lower volume base - it has been too early for investors with long memories to reward Smiths. The next three years will be the true test of Smith''s operating model. Further, margin development has been underwhelming, with limited operating leverage and disappointments in key divisions. For instance, 80% of Detection''s incremental revenue between FY''22-24 has been aftermarket driven yet its organic (ex-cost saving) drop-through has been negative on what should be mix rich growth. We advocate patience for investors who believe Smiths has changed We think the market will remain sceptical unless Smiths can convert its rich rates of organic sales growth into richer margin progression and improved ROCE and FCF margin. For now, we lack conviction...