Key highlights Smiths has released an in-line trading update. Key highlights include: the Group remains in growth mode, Smiths Medical is progressing towards a faster than expected transaction completion, the £742m share buyback is due to start next week, and FY expectations are unchanged. Current trading and outlook Q1 revenues grew 1% on an underlying basis. All divisions grew apart from Detection (as expected - order delivery timing). Smiths has delivered two quarters of growth now and is well positioned as markets recover with good order book momentum. Despite continued economic uncertainties and supply chain challenges, management expects Group revenue growth to return to around pre-COVID levels during the year and further operational efficiency and good cash generation. Overall, management is confident in meeting its FY22 expectations of delivering underlying revenue growth for the Group of c.3%. The proposed sale of Smiths Medical to ICU, for an EV of c$2.7bn, is progressing well (expected to complete in H1 CY22) and, subject to shareholder approval due on 19 Nov, the group expects to commence the share buyback programme (note: the Board proposes to return 55% of initial net cash proceeds ($1.85bn), which equates to £742m). Investment case We believe the investment case remains positive, given that (1) Smiths Medical should realise value, (2) There are clear opportunities to further improve growth and returns of the Group, and (3) John Crane (a high margin and aftermarket driven business) is nearly half of group profits. The shares are trading on a FY22E PE of 14.1x and EV/EBITDA of 12.0x with a 2.8% dividend yield, falling to 13.3x, 11.3x, 3.0% respectively in FY23E. Next catalyst is a capital markets event on 17 and 18 November 2021.