Morgan Stanley Upgrades Solventum to Overweight, Citing Significant Upside Potential

NEW YORK, NY – July 15, 2025 – Morgan Stanley has significantly upgraded its rating on Solventum Corporation (NYSE: SOLV) from Equalweight to Overweight, setting a new price target of $103. The upgrade reflects the firm's conviction that Solventum possesses underappreciated upside potential driven by anticipated margin expansion and a robust earnings trajectory.

Strategic Moves Paving the Way for Profitability

Morgan Stanley's increased confidence stems from Solventum's strategic initiatives, particularly the recent divestiture of its Personal & Food Safety (P&F) segment and a proactive reduction in debt. These actions are viewed as critical steps that will streamline operations, enhance profitability, and unlock substantial value for shareholders in the coming years.

"The strategic moves undertaken by Solventum, especially the P&F segment sale and debt reduction, are creating a clear path for meaningful value creation," stated a Morgan Stanley analyst in a research note. "We believe these foundational changes will allow the company to focus on its core strengths and optimize its operational footprint."

Bullish Outlook on Growth and Earnings

Looking ahead, Morgan Stanley projects that Solventum is well-positioned to achieve organic growth of approximately 4%. More notably, the firm anticipates a bullish trajectory for earnings per share (EPS), forecasting nearly $9 in EPS by 2028. This optimistic outlook is predicated on management's faster-than-expected progress in optimizing the business and realizing operational efficiencies.

"Management has demonstrated a remarkable ability to execute on its strategic objectives, exceeding our initial expectations for business optimization," the analyst added. "The pace of improvement in operational efficiencies suggests that current market consensus estimates are overly conservative, particularly regarding the company's margin improvement potential."

Favorable Risk-Reward Profile

Morgan Stanley believes that the market has yet to fully price in the extent of Solventum's operational improvements and future profitability. With significant operational efficiencies still unfolding and consensus estimates lagging behind what the firm views as achievable, Morgan Stanley sees a highly favorable risk-reward setup for investors.

This re-evaluation of Solventum's prospects underscores a belief that the company is on the cusp of a significant re-rating as its strategic initiatives bear fruit. The Overweight rating signals Morgan Stanley's strong recommendation for investors to consider adding SOLV to their portfolios, anticipating substantial capital appreciation as the company's financial performance aligns with its enhanced operational capabilities.