Orthopaedics giant Smith & Nephew recorded its worst day in more than two months after Berenberg said it thinks revenue growth will fall short of investor expectations in the next 12 to 18 months.

In a bearish broker note, the broker slashed the FTSE 100 company’s rating to “hold” from “buy”. Taking a cautious stance on its revenue outlook, analysts said share losses in its wound care division and a weak hip business were “hampering” growth.

The possibility of a bid for the company remains the only risk to a “more cautious view”. Indulging in some fantasy M&A, the broker said it still considers Johnson & Johnson as “a viable potential bidder”, as it would make it the “market leader” in orthopaedic reconstruction. But don’t forget, Smith & Nephew has been the subject of  bid rumours since 1968, when Unilever tried to acquire it.

Separately, the FTSE 100 stock was hurt by trading ex-dividend. It tumbled 43p to a three-week low of £12.22.

On the wider market, the FTSE 100 slipped back below 7,000 by close, falling 33.29 points, or 0.47pc, as a profit warning from easyJet weighed heavily on the blue chip index.

 The low cost carrier slumped to a three-and-a-half year low, down 69.5p to 933.5p, after it said it expects profit to fall by more than a quarter due to the pound weakness and security concerns. Negative read-across weighed on peers Ryanair and British Airways owner IAG, who fell 8p and 15.5p, respectively.

Among the laggards, a number of stocks were hurt by trading ex-dividend. Aviva dropped 10.1p to 443.3p, British Land lost 19.5p to 596p, Kingfisher slipped 5.2p to 375.2p, Sky fell 12p to 901p and Travis Perkins closed down 40p to £15.27.

On the other side, Croda International enjoyed a rating upgrade, sending shares 53p higher to £36.11. UBS hiked its rating to “buy” as it thinks the group’s recent investment in its US bioethanol facility will enhance Croda’s credentials as a green chemicals provider.

Banking stocks were also among the risers after Citigroup upgraded its rating on European banks to “overweight” citing signs of improvement in the credit cycle as well as cheap relative valuations.

Separately, Morgan Stanley cautioned HSBC’s revenues are likely to remain challenged. Nevertheless, shares in HSBC jumped 1.6p to 602.6p, Barclays added 1.8p to 174.3p, Royal Bank of Scotland rose 1.7p to 185.5p and Lloyds inched up 0.3p to 55p.

On the mid-cap index, Tullow Oil bounced 11.9p to a three-month high of 273.7p. Barclays lifted its price target to 340p as it thinks Tullow offers attractive leverage to a steady improvement in oil prices.