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Solventum Corporation (SOLV) is an independent healthcare company headquartered in Saint Paul, Minnesota. Valued at an impressive market cap of $10.3 billion, it operates across various business segments, including Medical and Surgical, Dental Solutions, Health Information Systems, and Purification and Filtration.
Shares of SOLV have struggled to keep up with the broader market over the past three months. While SOLV stock has declined 4.7% over this time frame, the S&P 500 Index ($SPX) has rallied by 5.8%.
Taking a closer look, SOLV has lagged behind the Health Care Select Sector SPDR Fund (XLV), which has gained 5.1% over the past three months.
Solventum faces several challenges following its spinoff from 3M Company (MMM). The company is burdened with significant debt, expected to reach $7 billion by the year's end, which strains its free cash flow (FCF) due to high interest expenses. Additionally, the company is failing to achieve growth levels that align with its estimated end-market growth projections.
However, on Aug. 8, SOLV stock rose 4.9% following the release of its Q2 earnings report. It surpassed the Street’s EPS estimate by 6.9%. Solventum raised its full-year 2024 guidance, now expecting organic sales growth between 0% and +1% (previously -2% to 0% range), and adjusted EPS is projected to be between $6.30 and $6.50 (up from the $6.10 to $6.40 range).
For the current fiscal year, ending in December, analysts expect Solventum’s EPS to fall 99.4% year over year to $6.40. Moreover, the company has exceeded the consensus estimate in each of the last two quarters.
Solventum stock has a consensus “Hold” rating overall. Four of five analysts covering the stock recommend a "Hold," while the remaining one suggests a "Strong Sell."
This configuration appears slightly bearish than three months before, with none having a “Strong Sell” rating.
On Aug. 12, Goldman Sachs Group (GS) analyst David Roman reiterated a “Sell” rating on Solventum while raising the price target from $48 to $54.
The mean price target of $60.25 suggests a 1.3% premium from SOLV's current price levels. Moreover, the Street-high target of $64 represents a 7.7% potential.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
