Solventum Corporation (SOLV) AI Stock Analysis

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Solventum Corporation

(NYSE:SOLV)

70Outperform

Solventum Corporation shows strong performance in its earnings call with increased guidance and robust segment growth. However, financial performance is hindered by high leverage and declining cash flow. The technical analysis indicates positive momentum, while valuation suggests the stock might be overvalued. Tariff challenges could impact future profitability.

Positive Factors

Financial Performance

The top-line outperformance of SOLV is seen as a positive surprise.

Growth Opportunities

Encouraging signs as bolt-on M&A is excluded but could begin to contribute from 2026, potentially in Advanced Wound Care or Dental sectors.

Product and Market Expansion

A solid glimpse into the NPWT and IVSM end markets suggests opportunities for SOLV to drive growth.

Negative Factors

Cost Impact

SOLV will see a ~200bps impact to COGS by 2028 as SOLV no longer benefits from pricing agreements with 3M.

Innovation Concerns

The vitality index is extraordinarily low at 2%, despite a welcome pipeline refresh and focus.

Margin Pressure

Tariff impacts are pressuring margins with adjusted operating margins expected at the low end of their range.

Solventum Corporation (SOLV) vs. S&P 500 (SPY)

Market Cap

$12.72B

Dividend YieldN/A

Average Volume (3M)1.23M

Price to Earnings (P/E)32.8

Beta (1Y)0.51

Revenue Growth1.28%

EPS Growth-70.82%

CountryUS

Employees22,000

SectorGeneral

Sector StrengthN/A

IndustryMedical - Care Facilities

Share Statistics

EPS (TTM)1.34

Shares Outstanding173,012,920

10 Day Avg. Volume1,170,645

30 Day Avg. Volume1,227,796

Financial Highlights & Ratios

PEG Ratio-3.06

Price to Book (P/B)4.12

Price to Sales (P/S)0.00

P/FCF Ratio15.09

Enterprise Value/Market Cap1.53

Enterprise Value/Revenue0.59

Enterprise Value/Gross Profit4.22

Enterprise Value/Ebitda2.63

Forecast

1Y Price Target

$81.83

Price Target Upside15.03% Upside

Rating ConsensusHold

Number of Analyst Covering7

Solventum Corporation Business Overview & Revenue Model

Company DescriptionSolventum Corporation, a healthcare company, engages in the developing, manufacturing, and commercializing a portfolio of solutions to address critical customer and patient needs. It operates through four segments: Medsurg, Dental Solutions, Health Information Systems, and Purification and Filtration. The Medsurg segment is a provider of solutions including advanced wound care, I.V. site management, sterilization assurance, temperature management, surgical supplies, stethoscopes, and medical electrodes. The Dental Solutions segment provides a comprehensive suite of dental and orthodontic products including brackets, aligners, restorative cements, and bonding agents. The Health Information Systems provides software solutions including computer-assisted, physician documentation, direct-to-bill and coding automation, classification methodologies, speech, recognition, and data visualization platforms. The Purification and Filtration segment provides purification and filtration technologies including filters, purifiers, cartridges, and membranes. The company was incorporated in 2023 and is based in Saint Paul, Minnesota.

How the Company Makes MoneySolventum Corporation generates revenue through the sale of its high-performance solar panels and energy storage systems to commercial and residential customers. Additionally, the company earns income from licensing its proprietary eco-friendly materials to manufacturers across different industries. Key revenue streams include product sales, licensing fees, and service contracts for maintenance and support of their energy solutions. Strategic partnerships with construction companies and government agencies further bolster Solventum's earnings by expanding its market reach and facilitating large-scale sustainable energy projects.

Solventum Corporation Financial Statement Overview

Summary

Solventum Corporation demonstrates moderate financial health with stable revenue growth and strong operating cash flow. However, significant declines in net income and free cash flow, coupled with high leverage, present potential risks. Improvements in margin management and debt reduction could enhance financial stability.

Income Statement

Positive

Solventum Corporation's revenue has shown a modest growth of 0.68% TTM. The gross profit margin stands at 55.66%, indicating efficient production processes. However, a significant drop in net profit margin to 5.79% TTM from 16.42% in 2023 highlights pressure on net income. The EBIT margin is at 12.56%, showing operational profitability, though it has declined from previous levels.

Balance Sheet

Positive

The company has a high debt-to-equity ratio of 2.71, suggesting increased leverage and potential financial risk. The return on equity is relatively low at 16.15% TTM, reflecting less effective use of equity capital. The equity ratio of 20.46% indicates that the company relies heavily on debt financing.

Cash Flow

Positive

Operating cash flow to net income ratio stands strong at 2.48 TTM, indicating effective cash generation from operations. However, free cash flow declined by 50.43% TTM, reducing financial flexibility. The free cash flow to net income ratio is 1.68, showing good conversion of income into cash.

Dec 2024	Dec 2023	Dec 2022	Dec 2021
Breakdown
Income Statement		Total Revenue
8.25B	8.20B	8.13B	8.17B
	Gross Profit
4.59B	4.69B	4.70B	4.92B
	EBIT
1.04B	1.69B	1.69B	1.88B
	EBITDA
1.53B	2.04B	2.27B	2.48B
	Net Income Common Stockholders
479.00M	1.35B	1.34B	1.46B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
762.00M	600.00M	61.00M	91.00M
	Total Assets
14.46B	14.38B	13.59B	14.07B
	Total Debt
8.01B	8.30B	95.00M	83.00M
	Net Debt
7.25B	7.70B	34.00M	-8.00M
	Total Liabilities
11.50B	10.97B	1.85B	2.02B
	Stockholders Equity
2.96B	3.41B	11.74B	12.06B
Cash Flow		Free Cash Flow
805.00M	1.63B	1.43B	1.93B
	Operating Cash Flow
1.19B	1.92B	1.68B	2.20B
	Investing Cash Flow
-380.00M	-230.00M	-253.00M	-278.00M
	Financing Cash Flow
-240.00M	-1.55B	-1.46B	-1.96B

Solventum Corporation Technical Analysis

Technical Analysis Sentiment

Positive

Last Price71.14

Price Trends

50DMA

70.57

Positive

100DMA

71.65

Negative

200DMA

69.51

Positive

Market Momentum

MACD

0.46

Negative

RSI

55.37

Neutral

STOCH

76.45

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SOLV, the sentiment is Positive. The current price of 71.14 is above the 20-day moving average (MA) of 67.31, above the 50-day MA of 70.57, and above the 200-day MA of 69.51, indicating a bullish trend. The MACD of 0.46 indicates Negative momentum. The RSI at 55.37 is Neutral, neither overbought nor oversold. The STOCH value of 76.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SOLV.

Solventum Corporation Risk Analysis

Solventum Corporation disclosed 39 risk factors in its most recent earnings report. Solventum Corporation reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Solventum Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
THC	78 Outperform	$14.65B	10.55	38.12%	―	-1.79%	-41.85%
FMS	77 Outperform	$16.48B	24.67	4.36%	1.58%	―	―
UHS	73 Outperform	$12.38B	10.79	18.35%	0.42%	9.73%	51.87%
DVA	71 Outperform	$10.87B	13.85	260.92%	―	5.11%	14.28%
SOLV	70 Outperform	$12.72B	32.78	10.63%	―	1.28%	-70.82%
EHC	68 Neutral	$11.85B	24.28	25.33%	0.56%	11.21%	30.38%
Sector *	56 Neutral	$4.70B	22.13	-18.79%	5.13%	16.68%	-63.84%

* General Sector Average

Performance Comparison

SOLV

Solventum Corporation

71.14

9.58

15.56%

DVA

DaVita

139.90

3.42

2.51%

FMS

Fresenius Medical Care

27.85

5.90

26.88%

EHC

Encompass Health

119.27

34.43

40.58%

THC

Tenet Healthcare

159.57

31.64

24.73%

UHS

Universal Health

187.83

9.57

5.37%

Solventum Corporation Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q1-2025)

% Change Since: 6.77%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Neutral

Solventum reported strong growth across its business segments and raised its sales growth guidance, indicating positive momentum. However, the company faces significant challenges from tariffs that will impact profitability in the second half of the year.

Q1-2025 Updates

Positive Updates

Strong Start to 2025

Solventum began fiscal year 2025 with a strong performance, showcasing 4.3% organic sales growth and adjusted earnings per share of $1.34, marking four consecutive quarters of positive growth.

MedSurg Segment Performance

The MedSurg business reported a very strong quarter, achieving 6% organic growth driven by positive business performance and favorable order timing.

Dental Solutions and New Product Launches

The Dental Solutions segment showed resilience with new product launches like Filtek Easy Match and Clarity Precision Grip Attachments, aiding in offsetting market challenges.

Health Information Systems Growth

The HIS segment saw a 3.9% increase in revenue, driven by strong customer retention in Revenue Cycle Management software solutions.

Purification & Filtration Segment Demand

The Purification & Filtration segment experienced robust demand for bioprocessing solutions, indicating strength in end markets.

Guidance Adjustment

Solventum raised its full-year organic sales growth guidance to 1.5% to 2.5%, reflecting strong business momentum.

Negative Updates

Tariff Challenges

Tariffs are expected to be a significant headwind, with an estimated impact of $80 million to $100 million in 2025, affecting gross margins and operating margins in the second half of the year.

Gross Margin Decline

Gross margins decreased by 260 basis points compared to the prior year, due to increased costs and seasonality.

Company Guidance

In the first quarter of fiscal year 2025, Solventum demonstrated robust financial performance, prompting an increase in their organic revenue guidance to 1.5% to 2.5% for the year. The company reported a 4.3% organic sales growth and adjusted earnings per share (EPS) of $1.34, marking their fourth consecutive quarter of positive growth. Despite facing headwinds from tariffs, Solventum maintained its EPS guidance between $5.45 and $5.65 by leveraging favorable foreign exchange rates and implementing mitigation strategies. The MedSurg segment led with a 6% organic growth, driven by improved commercial execution and successful product launches. The Dental Solutions segment showed resilience with a 0.4% growth amidst market challenges. Solventum's focus remains on executing its transformation plan, enhancing commercial productivity, and investing in growth areas to deliver sustainable improvement and shareholder value.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.