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With a market cap of $11.5 billion, Solventum Corporation (SOLV) is a U.S.-based healthcare company that was spun off from 3M on April 1, 2024. Headquartered in Maplewood, Minnesota, Solventum focuses on delivering innovative solutions across various healthcare segments.
The next-gen care leader is expected to announce its first-quarter results on Thursday, May 8. Ahead of the event, analysts expect SOLV to report a non-GAAP profit of $1.19 per share, down 42.8% from $2.08 per share in the year-ago quarter. The company has a mixed earnings surprise history. It has surpassed Wall Street’s earnings estimates three of the past three quarters while missing on one other occasion.
For the current year, Solventum is projected to post adjusted EPS of $5.55, down 17.2% from $6.70 in fiscal 2024. However, its adjusted earnings are likely to rebound next year, improving 8.7% annually to $6.03.
SOLV has soared 6.9% over the past year, significantly underperforming the S&P 500 Index’s ($SPX) 9.4% gains but outshining the Healthcare Select Sector SPDR Fund’s (XLV) 1.3% decline during the same time frame.
Solventum reported its Q4 results on Feb. 27, and its shares slid 4.4%. The company's revenue grew 1.9% year-over-year to $2.1 billion, edging past Wall Street estimates, supported by a 2.3% rise in product sales. However, rising costs weighed on profitability, pushing gross profit down 3.4%. Non-GAAP net income also declined 34.1% to $247 million, although earnings per share of $1.41 beat analyst expectations by 7.6%.
Investor sentiment took a hit as Solventum’s FY2025 outlook fell short of expectations. The company projected organic sales growth of just 1%–2%, with adjusted EPS anticipated between $5.45 and $5.65, a notable decline from $6.70 in FY24. Adding to the concerns, Solventum also forecasted a sharp drop in free cash flow, expecting it to fall from $805 million in FY24 to between $450 million and $550 million, further unsettling investors.
Analysts remain cautious about the stock’s prospects. SOLV has a consensus “Hold” rating overall. Out of the 10 analysts covering the stock, one advises “Strong Buy,” eight suggest “Hold,” and one recommends a “Strong Sell” rating. Its mean price target of $81.14 indicates a premium of 22.8% from the prevailing price levels.
