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On Friday, Mizuho (NYSE:MFG) Securities updated its financial outlook for Solventum (NYSE: SOLV), increasing the price target to $85 from the previous $82 while keeping a Neutral stock rating. The revision follows Solventum’s recent Analyst Day, where the company discussed its financial strategies and expectations, particularly concerning the sale of its Purification/Filtration (P&F) assets, anticipated to close by December 31, 2025.
Analysts at Mizuho have adjusted their financial model for Solventum to account for the full financial impact of the P&F asset divestiture. As a result of this update, the projected earnings per share (EPS) compound annual growth rate (CAGR) through 2028 is now estimated at approximately 9.5-10.0%, which aligns with the company’s updated guidance of around a 10% EPS CAGR.
The new estimates provided by Mizuho reflect an expectation of consistent EPS growth of about 10% annually. However, the year 2027 may present more significant challenges due to an anticipated $100 million cost of goods sold (COGS) increase related to 3M. Mizuho has revised its EPS estimates for the years leading up to 2028, with the 2026 EPS forecast increasing from $5.85 to $6.05, the 2027 forecast from $6.20 to $6.55, and introducing a new 2028 EPS estimate of $7.35.
In their analysis, Mizuho projects a 4.5% revenue growth for Solventum in 2028, with performance in the MedSurg/Dental sectors expected to be slightly below this figure, but with the Healthcare Information Technology (HCIT) sector likely to exceed it. Additionally, an EBIT margin of 23.3% is anticipated for 2028, which falls within the company’s newly established long-term guidance ranges.
The price target increase to $85 is based on a 14 times price-to-earnings (P/E) ratio applied to the higher EPS estimate for 2026. Mizuho’s decision to maintain a neutral stance on Solventum stock, despite the revised financial projections, suggests a cautious optimism regarding the company’s performance over the next several years.
In other recent news, Solventum reported its fourth-quarter 2024 earnings with revenues reaching $2.1 billion, reflecting a 2.3% organic growth. However, the earnings per share (EPS) of $1.41 fell short of the forecasted $1.50. Piper Sandler responded to Solventum’s quarterly performance by raising the company’s price target to $84 from $75, while maintaining a Neutral rating. This decision came after Solventum’s earnings exceeded consensus estimates, despite the EPS miss. Solventum also announced its strategic goals during the 2025 Investor Day, targeting organic sales growth of 4-5% by 2028 and expanding operating margins to 23-25%. The company is focusing on enhancing its Medical (TASE:BLWV) Surgical, Dental Solutions, and Health Information Systems divisions, following the divestiture of its Purification & Filtration segment. Proceeds from this sale are aimed at reducing debt, with share repurchases and dividends considered over time. Solventum’s management remains optimistic about the company’s transformation strategy, emphasizing innovation and operational improvements.
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