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Investing.com - Morgan Stanley (NYSE:MS) upgraded Solventum (NYSE:SOLV) from Equalweight to Overweight on Tuesday, setting a price target of $103.00, significantly above the current trading price of $74.65. The stock has shown impressive momentum, delivering a 53.61% return over the past year.
The upgrade comes as Morgan Stanley sees potential for Solventum to "drive material value over the coming years" following the company’s sale of its P&F division and subsequent debt reduction.
The research firm believes Solventum can address cost inefficiencies and potentially increase organic growth to approximately 4%, which could lead to nearly $9 of earnings per share by 2028 in a bull case scenario.
Morgan Stanley noted that Solventum’s management has gained control of the business faster than anticipated, creating an opportunity for investors.
The firm also stated that both consensus estimates and buy-side expectations may be "too pessimistic on the margin opportunity vs. the guide," suggesting an "asymmetric upside skew" for the stock.
In other recent news, Solventum Corp reported its Q1 2025 earnings, revealing a mixed financial performance. The company posted adjusted earnings per share of $1.34, falling short of the projected $1.57, while generating $2.1 billion in revenue, which met expectations. Despite the earnings miss, Solventum achieved organic sales growth of 4.3%, driven by strong demand in its bioprocessing solutions and new product launches. Additionally, Piper Sandler upgraded Solventum’s stock rating from Neutral to Overweight, raising the price target to $87, citing positive developments such as easing tariff risks and strategic divestitures. The sale of Solventum’s Products & Filtration division to Thermo Fisher (NYSE:TMO) for $4.1 billion is expected to enhance the company’s capital allocation flexibility.
Furthermore, KeyBanc initiated coverage on Solventum with a Sector Weight rating, expressing caution due to limited visibility into sustainable revenue growth. Solventum’s management is focusing on strategies aimed at achieving mid-single-digit market growth, though challenges remain. The company’s valuation is seen as moderately discounted compared to peers, reflecting current growth trends. These developments indicate a focus on strategic initiatives and market positioning, as Solventum navigates a challenging economic landscape.
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