Wedbush initiated coverage on Solventum (NYSE:SOLV) with an Outperform rating and a $94.00 price target.
The firm sees the stock as a compelling special situation with multiple catalysts. Solventum was spun off from 3M in April 2024 and has underperformed expectations in its early standalone period.
Wedbush believes the current 9.6x EV/EBITDA multiple undervalues the company's leading franchise portfolio. The stock trades at $74.42.
Activist investor Trian, holding about 5% of Solventum, demands portfolio simplification. The company targets 23%-25% EBIT margins by fiscal 2028.
Solventum completed a $4 billion Purification & Filtration divestiture and exited over 40% of transition service agreements with 3M. Wedbush expects these catalysts to drive a valuation re-rating over the next 12-18 months.
