Solventum Corporation (SOLV): A Bull Case Theory

We came across a bullish thesis on Solventum Corporation on Value investing subreddit by raytoei. In this article, we will summarize the bulls’ thesis on SOLV. Solventum Corporation's share was trading at $85.59 as of December 2nd. SOLV’s trailing and forward P/E were 9.79 and 13.87  respectively according to Yahoo Finance.

Solventum Corporation, a healthcare company, develops, manufactures, and commercializes a portfolio of solutions to address critical customer and patient needs in the United States and internationally.  SOLV, a newly spun-off company from 3M, presents a compelling turnaround opportunity driven by low market expectations and strong leadership. The company is a leader in wound care, with rapidly growing dental bonding products and a health information system. At the time of the spin-off, Solventum appeared weak, burdened by a high debt load—D/E of 2.64 and net debt/EBITDA of 5.73—making it appear uninvestable.

However, following the sale of its water filtration business earlier this year, the company has significantly deleveraged, bringing net debt/EBITDA down to 1.35. Management has set clear long-term targets through 2028, including 4–5% annual sales growth, 10% annual earnings growth, 80% free cash flow conversion, and margin expansion, and recent earnings indicate the company is ahead of schedule to meet these objectives.

Leadership under CEO Bryan Hanson, formerly of Zimmer Biomet, is a key catalyst, as he specializes in operational turnarounds, supply chain optimization, and regulatory compliance in healthcare. Valuation remains attractive due to pessimistic market sentiment. Using conservative assumptions, such as a flat 2025 EPS of $6, the stock’s price floor is around $66–67.

Accounting for modest terminal growth of 3%, fair value rises to $80, and with a conservative 5% growth over five years, net present value could reach $112. The stock’s current price of $71.79 reflects low expectations and a “show me” mentality from analysts, with market-implied valuations from Morningstar and CFRA at $79.

Key risks include potential litigation related to PFAS in certain wound-care products sold post-2026, though the company appears aware and positioned to manage these exposures. Overall, Solventum offers a classic slow-and-steady turnaround investment with strong leadership, deleveraged finances, and visible growth targets, providing an attractive risk-reward profile for patient investors.

Previously we covered a bullish thesis on Lantheus Holdings, Inc. (LNTH) by Oliver | MMMT Wealth in January 2025, which highlighted its leadership in radiopharmaceuticals and growth in PSMA PET imaging. The stock has depreciated approximately 38.14% since our coverage due to market challenges. The thesis still stands as LNTH retains innovation potential. Raytoei shares a similar approach but emphasizes Solventum’s turnaround, deleveraging, and steady growth post-spin-off.

Solventum Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held SOLV at the end of the second quarter which was 38 in the previous quarter. While we acknowledge the potential of SOLV as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.