SOLV
Solventum Corporation$72.91
Sell
Target $55.22
Report: Mar 07, 2026Healthcare • Medical - Care Facilities • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$72.91-24.3%
Rec: SellConviction: Low
Entry Target
N/A
N/A
Fair Value
$55.22
(24% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$88.20
52 Week Low$60.70
Avg. 3 Month Volume1.20M
Efficiency
LTM Gross Margin53.5%
LTM EBITDA Margin30.6%
LTM EBIT Margin24.7%
LTM Operating Margin7.6%
LTM ROA10.8%
LTM ROE36.7%
LTM ROIC21.5%
LTM ROCE17.6%
Capital Structure
Market Cap (MM)$11.3B
Enterprise Value (MM)$15.5B
Shares Outstanding174.40M
Total Debt (MM)$5.04B
Cash & Equivalents (MM)$878.00M
LTM Net Debt (MM)$4.16B
LTM Net Debt/EBITDA1.6x
Growth
TTM Rev. Growth0.9%
Last 3-Yr Rev. CAGRN/A
Last 3-Yr EBITDA CAGRN/A
Last 3-Yr EPS CAGRN/A
Valuation
Street Target Price$100.50
LTM EV/Revenue1.9x
LTM EV/Gross Profit3.5x
LTM EV/EBIT7.5x
LTM EV/EBITDA6.1x
LTM P/E7.3x
LTM EV/FCF-1548.6x
LTM P/FCF-1132.9x
LTM P/TB1.9x
LTM P/B2.2x
Dividend Yield0.0%
Payout Ratio0.0%
Executive SummarySituation: Current price is $72.91 versus fair value $55.22 (-24.3% expected return), and valuation confidence is stable. Debate: Bull case depends on Realization of FY2026 Tariff Headwinds: Management has guided to a $100M-$120M tariff impact in 2026. Bear case centers on Moat Erosion in Dental and MedSurg: Intense competition and pricing pressure could permanently impair the company's 53.5% gross margin, leading to the bear case scenario. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The 'Transform for the Future' program successfully realizes $500M in annual savings, lifting GAAP operating margins toward the 20% target. The Acera acquisition and AI-driven HIS products accelerate organic growth to >4%, justifying a re-rating to sector-average multiples.
Bear Case
Persistent tariff headwinds ($120M annually) and 3M supply-agreement pricing permanently impair gross margins. Negative free cash flow and high leverage (3.7x net debt/EBITDA) prevent the execution of buybacks, leading to continued shareholder dilution.
Key Catalysts
Near-Term (0-6 months)Impact: Critical
Realization of FY2026 Tariff Headwinds: Management has guided to a $100M-$120M tariff impact in 2026. If this materializes without correspon...
Mid-Term (6-18 months)Impact: High
Continued 3M Divestment: 3M Co still holds a significant stake after their $646M sale. Further secondary offerings will create technical pre...
Long-Term (18+ months)Impact: Moderate
Solventum is at a critical juncture following its first full year as a standalone entity; the recent collapse in GAAP operating margins to 7...
Primary Risks
Concern: High
Moat Erosion in Dental and MedSurg: Intense competition and pricing pressure could permanently impair the company's 53.5% gross margin, lead...
Concern: Medium
Leverage and Solvency: With $4.2B in net debt and negative free cash flow, the company has limited headroom for further operational misses.
Concern: Medium
Stewardship is currently failing shareholders. The Governance Outcome Tree suggests: 1. **Status Quo**: Management continues to miss GAAP ta...
Recent Activity
2025-11-07SEC Filing (8-K)
+7.91%Solventum reported Q3 2025 results with 0.7% sales growth and announced 'Transform for the Future' initiative.
2025-05-09SEC Filing (8-K)
+5.40%Solventum reported Q1 2025 financial results with 2.6% sales growth and updated full-year guidance.
2025-02-25Press Release
+9.54%Thermo Fisher Scientific To Acquire Solventum'S Purification And Filtration Business
Valuation Table
9.8/10Decision Grade
Scenario Range
$120
Bear
$51
Base
$1
Bull
$73