Solventum (SOLV): Buy, Sell, or Hold Post Q4 Earnings?

March 18, 2025 at 05:11 AM EDT

SOLV Cover Image

Solventum has been treading water for the past six months, recording a small return of 2.6% while holding steady at $74.01.

Is there a buying opportunity in Solventum, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

We're cautious about Solventum. Here are three reasons why there are better opportunities than SOLV and a stock we'd rather own.

Why Do We Think Solventum Will Underperform?

Founded in 1985, Solventum (NYSE: SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs.

1. Slow Organic Growth Suggests Waning Demand In Core Business

In addition to reported revenue, organic revenue is a useful data point for analyzing Surgical Equipment & Consumables - Diversified companies. This metric gives visibility into Solventum’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.

Over the last two years, Solventum’s organic revenue averaged 1.3% year-on-year growth. This performance was underwhelming and suggests it may need to improve its products, pricing, or go-to-market strategy, which can add an extra layer of complexity to its operations. Solventum Organic Revenue Growth

2. Projected Revenue Growth Shows Limited Upside

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Solventum’s revenue to stall, close to its flat sales for the past two years. This projection is underwhelming and indicates its newer products and services will not accelerate its top-line performance yet.

3. EPS Trending Down

Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Sadly for Solventum, its EPS declined by 18.2% annually over the last two years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Solventum Trailing 12-Month EPS (Non-GAAP)

Final Judgment

We cheer for all companies serving everyday consumers, but in the case of Solventum, we’ll be cheering from the sidelines. That said, the stock currently trades at 13.8× forward price-to-earnings (or $74.01 per share). This multiple tells us a lot of good news is priced in - you can find better investment opportunities elsewhere. Let us point you toward a dominant Aerospace business that has perfected its M&A strategy.

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