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With a market cap of $11.6 billion, Solventum Corporation (SOLV) is an independent healthcare company, focused on developing, manufacturing, and commercializing solutions to meet critical healthcare needs. The Saint Paul, Minnesota-based company operates across four key segments: Medsurg; Dental Solutions; Health Information Systems; and Purification and Filtration.
Shares of the healthcare company have underperformed the broader market over the past six months. SOLV has risen 8.5% over this time frame, while the broader S&P 500 Index ($SPX) has gained 11.1%.
However, SOLV stock has outpaced the Health Care Select Sector SPDR Fund's (XLV) 2.7% decline over the past six months.
Despite reporting better-than-expected Q3 adjusted EPS of $1.64 and revenue of $2.1 billion on Nov. 7, shares of Solventum fell 3.5% the following day due to a significant decline in net income, which dropped more than 70% year-over-year. The company also raised its full-year guidance, but investors were concerned about the ongoing rise in operating expenses, including public company setup costs and increased investments. Additionally, uncertainty surrounding the company’s ability to sustain long-term growth after its spin-off from 3M contributed to the negative market reaction.
For the current fiscal year, ending in December, analysts expect SOLV's EPS to decline 99.3% year-over-year to $6.58. The company's earnings surprise history is mixed. It beat the consensus estimates in two of the last three quarters while missing on another occasion.
Among the nine analysts covering the stock, the consensus rating is a “Hold.” That’s based on one “Strong Buy” rating, seven “Holds,” and one “Strong Sell.”
On Nov. 12, Morgan Stanley raised its price target on Solventum to $73 and maintained an “Equal-Weight" rating, highlighting the company's strong Q3 performance and its ability to navigate the challenging MedTech environment, particularly in the MedSurg segment.
As of writing, SOLV is trading below the mean price target of $71.50. The Street-high price target of $82, implies a potential upside of 22.7% from the current price levels.
