SOLVENTUM CORPORATION (SOLV): what the price requires

The current priced-in claim for SOLVENTUM CORPORATION (SOLV) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/SOLV

Headline

FieldValue
TickerSOLV
CompanySOLVENTUM CORPORATION
Sector / IndustryHealthcare
Current price$77.60/sh
CompositionMedSurg 58% / Dental Solutions 16% / Health Information Systems 16% / Purification and Filtration 6% / All Other 4%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed7.9%
Operating margin today25.6%
Margin compression implied-17.7pp
Multiple paid9x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
cohort percentile (of 112 peers)5
implied end-window share0%

Valuation X-Ray

The price is supported by earnings-power and relative-multiple value, while asset-based/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.89x2expensive
Earnings1.06x1expensive
Relative0.41x3justifies
Growth1.59x1expensive

Families that justify the price: Earnings, Relative Families that call it expensive: Asset, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.

Per-Model Detail (n=7)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$0.00—noReference only (OCF-based, capex excluded): OCF $0.2B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$188.310.41xyesP/S fallback (negative EPS): Sector P/S 4.0x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$28.312.74xyesReference only (book value floor): BV/sh $28.31, ROE negative
Two-Stage Excess ReturnAsset$25.483.05xyesReference only (book value with convergence): BV/sh $28.31, ROE converges to ke
Discounted Future Market CapGrowth$48.831.59xyesRev $8.3B, growth -1% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$73.021.06xyesNormalized EBIT (3y avg op income, one-time charges added back) $1.67B × (1−19%) / WACC 7.8% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$211.740.37xyesEBITDA $2.60B × sector EV/EBITDA 16.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$2.5031.04xyesBV $28.31 × (ROIC 0.7% / WACC 7.8%) (excluded from median)
P/Sales SectorRelative$188.310.41xyesRevenue $8.26B × sector P/S 4.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$5.2b
Net debt / NOPAT (after-tax)2.99x
Net debt / operating income (pre-tax)2.43x
Share count CAGR (dilution)0.5%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The market is pricing Solventum as a business whose best years sit behind it. At $76.67 (July 10, 2026) the price works out to about nine times company-wide operating income, a level consistent with a company whose operating profit shrinks year after year. The fundamentals describe something different. Organic sales grew 2.1% in the first quarter and adjusted earnings per share rose 10.6%, and the trailing operating margin runs at 25.5%. Modest growth at a healthy margin is not a melting business. The gap between what the price assumes and what the operations are doing is the bull case in one sentence.

What the company actually is helps explain why the market struggles with it. Following the September 2025 divestiture of Purification and Filtration, Solventum is "organized into three reportable business segments": MedSurg, described in the 10-K as a provider of advanced wound care and surgical solutions "intended to accelerate healing, prevent complications and lower the total cost of care globally", Dental Solutions, and Health Information Systems [FY2025 10-K, accession 0001964738-26-000007]. The revenue base is balanced across geographies, with 56% of sales in the United States [FY2025 10-K, accession 0001964738-26-000007], and the customer relationships are sticky by design: the filing points to "long-tenured and collaborative customer relationships globally" that feed the product pipeline [FY2025 10-K, accession 0001964738-26-000007]. In Health Information Systems, revenue growth came from "adoption of our Solventum™ 360 Encompass™ and performance management solutions" [FY2025 10-K, accession 0001964738-26-000007], software that sits inside hospital revenue-cycle workflows and does not get ripped out casually.

Management is also doing the things a cheap, cash-generative company should do. The Purification and Filtration business went to Thermo Fisher for approximately $4.0 billion in cash, with proceeds directed primarily at debt reduction. A $1.0 billion share repurchase program began execution in January 2026, and the $850 million Acera Surgical acquisition ($725 million cash plus up to $125 million in contingent milestone payments) adds regenerative tissue technology to the largest segment. If the standalone cost structure normalizes while the buyback works on the share count, the earnings power at today’s multiple does the rest. Wedbush initiated the stock in June at Outperform with a $94 target, calling it a multi-catalyst special situation; that is one reading of the same arithmetic.

Bear Case

Start with how the cash is being spent, because a company two years into standing alone is doing a lot at once. Solventum carries $5.7 billion of gross debt, and its own filing names "the cost to service the debt we incurred in connection with the separation" among the risks to its market opportunity [FY2025 10-K, accession 0001964738-26-000007]. Against that backdrop, management launched a $1.0 billion buyback in January 2026 and agreed to pay $850 million for Acera Surgical, while the share count has actually drifted up about half a percent a year over the past three years. Buying back stock, buying a company, and servicing separation debt simultaneously is a capital-allocation program with no slack in it, and the GAAP income statement shows the strain: first-quarter GAAP earnings were $0.07 per share against $1.48 adjusted. The space between those two numbers is separation and restructuring cost, and it has to keep shrinking for the equity story to work.

The operating pressure is not hypothetical. MedSurg, at 58% of sales the segment that matters most, saw profitability decline on "higher product costs due to tariffs, logistics and a full year of supply agreement mark-ups from 3M" [FY2025 10-K, accession 0001964738-26-000007]. The company is also absorbing "higher costs associated with both initial stand-up and ongoing operations to support a standalone company" [FY2025 10-K, accession 0001964738-26-000007]. Inside Health Information Systems, the growth product is doing the work while "clinician productivity solutions declined primarily due to impacts from changing market conditions" [FY2025 10-K, accession 0001964738-26-000007]. A 25.5% trailing margin is the number the cheap-multiple argument rests on; tariffs, supply mark-ups, and standalone overhead all push against it.

The structural risks compound the margin question. The 10-K warns that "if Solventum faces an increase in costs or reduces its prices because of industry consolidation, or if Solventum loses customers as a result of consolidation" the business suffers [FY2025 10-K, accession 0001964738-26-000007], and hospital purchasing keeps consolidating. Dental Solutions faces Align Technology in orthodontics, and the filing describes the healthcare IT market as "highly competitive and dynamic" [FY2025 10-K, accession 0001964738-26-000007]. Meanwhile the price already sits below what even a steadily shrinking operating-profit stream would justify, which means the market is not being careless; it is charging for the possibility that margins compress from here. If organic growth stays near 2% and the margin gives back a few points, the multiple stops looking cheap and starts looking correct. Cheap because of what could deteriorate is a different proposition from cheap by oversight.

Valuation

At $76.67 the market pays about nine times company-wide operating income for Solventum, a price low enough that it sits below what even a 5% annual decline in operating profit would warrant at an 8.1% cost of capital. The bet embedded in the price, in other words, is not on growth at all; the price would be earned back even by a business in gentle retreat, and the company as reported is growing organically at 2.1% on $8,325 million of 2025 sales [FY2025 10-K, accession 0001964738-26-000007] at a 25.5% trailing operating margin. Against its healthcare peer set the multiple lands in the lower half of the range.

The methods we use to triangulate the price disagree in an unusual pattern. Peer-multiple comparisons land far above today’s price: on those lenses the stock trades at well under half of what comparable-company multiples would defend. The earnings-power view, which capitalizes current operating profit with no growth credited, lands essentially at the price. The forward-looking cash-flow view sits below it, with the price about 60% above what that method reaches, and the asset-value lenses find it expensive, with the price near three times where book-value-plus-profitability arithmetic lands. Read together: the price is supported by what the business earns today and by how peers are priced, not by balance-sheet value and not by aggressive growth assumptions. This is a value proposition resting on earnings durability, not a growth bet.

The balance sheet frames the downside. Net debt of $5.2 billion runs at about 2.5 times trailing operating income (roughly 3.0 times on an after-tax basis), the company is not burning cash, and the share count has been close to flat, drifting up about 0.5% a year over three years, a drift the newly launched buyback is positioned to reverse. Leverage at two and a half turns of operating income is serviceable for a business with recurring hospital and dental revenue, but it is real debt from the separation, and it is the reason the earnings-power support under the price matters more here than it would for a net-cash company. The one thing the price needs is for the 25.5% margin to hold while the standalone cost structure finishes normalizing.

Catalysts

The first quarter, reported May 5, 2026, set the near-term frame: sales of $2.01 billion were down 3.0% on the divested Purification and Filtration revenue, organic growth was 2.1%, adjusted EPS rose 10.6% to $1.48, and management reaffirmed full-year 2026 guidance including adjusted EPS toward the high end of $6.40 to $6.60. The next quarterly print, on the company’s roughly 90-day reporting cadence, is the next hard information event, and the items to check are the same ones the quarter raised: organic growth holding in the 2 to 3% range, the tariff and supply-cost drag on MedSurg margins, and progress narrowing the gap between GAAP and adjusted earnings.

Two capital moves are live. The $850 million Acera Surgical acquisition ($725 million cash, up to $125 million contingent on milestones) adds regenerative surgical biomaterials to MedSurg, and integration progress plus any disclosed revenue contribution will show up over the next two prints. The $1.0 billion share repurchase program began execution in January 2026; the share count line each quarter is the scoreboard.

Analyst positioning split in June. Wedbush initiated at Outperform with a $94 target, framing the stock as a multi-catalyst special situation, while Rothschild & Co Redburn opened coverage with a bearish stance on execution and margin-compression risk, and BTIG, Piper Sandler, and UBS trimmed targets. The consensus rating remains Buy with an average target near $84. The disagreement maps cleanly onto the fundamental question: whether the post-separation cost structure normalizes before the tariff and consolidation pressures eat the margin.

Peer Cohorts (Per Segment, With Filing Citations)

MedSurg (reported)

Dental Solutions (reported)

Health Information Systems (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 FY2026 earnings release, May 5, 2026 · Solventum press releases, 2026 · Thermo Fisher press release, September 2025 · Q1 FY2026 earnings release · Wedbush initiation, June 2026 · Solventum press release, 2026 · analyst actions compiled June 2026 · MarketBeat, July 2026

View the full interactive SOLV report on boothcheck