Latest news with #Solventum
Yahoo
5 days ago
- Business
- Yahoo
Q1 Rundown: Solventum (NYSE:SOLV) Vs Other Surgical Equipment & Consumables
Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let's have a look at Solventum (NYSE:SOLV) and its peers. The surgical equipment and consumables industry provides tools, devices, and disposable products essential for surgeries and medical procedures. These companies therefore benefit from relatively consistent demand, driven by the ongoing need for medical interventions, recurring revenue from consumables, and long-term contracts with hospitals and healthcare providers. However, the high costs of R&D and regulatory compliance, coupled with intense competition and pricing pressures from cost-conscious customers, can constrain profitability. Over the next few years, tailwinds include aging populations, which tend to need surgical interventions at higher rates. The increasing integration of AI and robotics into surgical procedures could also create opportunities for differentiation and innovation. However, the industry faces headwinds including potential supply chain vulnerabilities, evolving regulatory requirements, and more widespread efforts to make healthcare less costly. The 5 surgical equipment & consumables - diversified stocks we track reported a satisfactory Q1. As a group, revenues beat analysts' consensus estimates by 1%. In light of this news, share prices of the companies have held steady as they are up 1.6% on average since the latest earnings results. Founded in 1985, Solventum (NYSE:SOLV) develops, manufactures, and commercializes a portfolio of healthcare products and services addressing critical customer and therapeutic patient needs. Solventum reported revenues of $2.07 billion, up 2.7% year on year. This print exceeded analysts' expectations by 2.7%. Overall, it was a very strong quarter for the company with a solid beat of analysts' organic revenue estimates and a decent beat of analysts' EPS estimates. "Our first quarter fiscal year 2025 results reflect solid revenue growth across our business and the positive progress we're making as part of our 3-phased transformation," said Bryan Hanson, chief executive officer of Solventum. Solventum achieved the biggest analyst estimates beat of the whole group. The stock is up 12.6% since reporting and currently trades at $75.14. Is now the time to buy Solventum? Access our full analysis of the earnings results here, it's free. With over five decades of experience in surgical innovation since its founding in 1970, CONMED (NYSE:CNMD) develops and manufactures medical devices and equipment for surgical procedures, specializing in orthopedic and general surgery products. CONMED reported revenues of $321.3 million, up 2.9% year on year, outperforming analysts' expectations by 2.6%. The business had a very strong quarter with an impressive beat of analysts' full-year EPS guidance estimates and a solid beat of analysts' EPS estimates. CONMED pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 15.4% since reporting. It currently trades at $56.57. Is now the time to buy CONMED? Access our full analysis of the earnings results here, it's free. With a history dating back to 1897 and a presence in virtually every hospital around the globe, Becton Dickinson (NYSE:BDX) develops and manufactures medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions and professionals worldwide. BD reported revenues of $5.27 billion, up 4.5% year on year, falling short of analysts' expectations by 1.5%. It was a slower quarter as it posted a miss of analysts' constant currency revenue estimates and a slight miss of analysts' full-year EPS guidance estimates. BD delivered the fastest revenue growth but had the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 16.4% since the results and currently trades at $173. Read our full analysis of BD's results here. With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE:STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments. STERIS reported revenues of $1.48 billion, up 4.3% year on year. This print was in line with analysts' expectations. Overall, it was a strong quarter as it also recorded a narrow beat of analysts' full-year EPS guidance estimates and a decent beat of analysts' EPS estimates. The stock is up 6.6% since reporting and currently trades at $242.10. Read our full, actionable report on STERIS here, it's free. With a history dating back to 1927 and a presence in over 100 countries worldwide, Zimmer Biomet (NYSE:ZBH) designs and manufactures orthopedic products including knee and hip replacements, surgical tools, and robotic technologies for joint reconstruction and spine surgeries. Zimmer Biomet reported revenues of $1.91 billion, up 1.1% year on year. This number beat analysts' expectations by 0.7%. Aside from that, it was a slower quarter as it recorded a miss of analysts' full-year EPS guidance estimates. Zimmer Biomet had the slowest revenue growth among its peers. The stock is down 10.1% since reporting and currently trades at $91.99. Read our full, actionable report on Zimmer Biomet here, it's free. The Fed's interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump's presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025. Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Yahoo
02-06-2025
- Business
- Yahoo
Solventum Stock Earns RS Rating Upgrade
On Monday, Solventum stock received a positive adjustment to its Relative Strength (RS) Rating, from 66 to 74. Can You Really Time The Stock Market? IBD's unique rating identifies price movement with a 1 (worst) to 99 (best) score.
Yahoo
01-06-2025
- Business
- Yahoo
3M Co: A company with a sound balance sheet, and mixed shareholder distributions.
Investment Thesis Although the legal ramifications of 3M's production of perfluoroalkyl substances (PFAS) are unclear, the risks have been mitigated by settlements and the Solventum spinoff. The company is a materials science company that produces cutting-edge products like ceramic composites for aircraft engines, traffic signs, overhead projectors, and electronic displays using microreplication technology. Because 3M's technology is hard to copy and its proprietary secrets are tightly guarded, its prices are 10% to 30% higher than those of the competition. In addition to providing economies of scope, 3M's ability to adapt its technology into a variety of use cases lowers overall unit costs and boosts gross margins. With modest margin expansion primarily from operating leverage, 3M can grow its organic top line by 2% to 3% annually after the Solventum spinoff. Although 3M has some growth initiatives, especially in automotive electrification, the company's intrinsic value has been diminished during the tenure of its previous CEO, Mike Roman. Other key industries, like home filtration products and personal safety gear, ought to keep expanding in line with GDP. Warning! GuruFocus has detected 5 Warning Signs with MMM. Notable Guru Holding Why Gurus Like 3M Least It is profoundly baffling that none of the top Gurus an exposure of even a percentage in 3M. Additionally the gurus who have the most exposure are traditional long/short hedge funds, who often times focus on the catalyst present in the immediate times these kind of hedge funds engage in sophisticated derivative trades which mandates them take a position in a stock to fully execute the trade. One possible explanation, apart from the legal battles, why deep value investors like Bill Ackman (Trades, Portfolio), Warren Buffett (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio)t themselves at an arm's length from 3M's stock could be its oblivion status of its cash flow. Over the past five years its free cash flow tanked by 90%. And this coincided with the dip in its dividend payout ratio which is down by 20% over the same period. For value investors, a smooth and organic mobility of cash from between holdings in their portfolio is the cornerstone of their investment philosophy. And for a company as big ( $75 billion market cap) and as matured (123 years old), a 90% dip in free cash flow in the past 5 years is a gigantic red flag for deep value investors. Investment Upsides Strong brands like Scotch masking and painter's tape, Filtrete air filters, and Command hanging solutions give 3M's construction and home improvement division a broad moat. With the invention of Scotch masking tape in 1925 and Scotch cellulose tape five years later, these brands have a lengthy history. 3M uses its adhesive technology in a number of products, including duct tape, hanging clips and hooks, toilet paper holders, drywall picture hangers, and fasteners for mounting tools, securing seat cushions, and holding down a broad but eroding moat, the consumer divisionwhich includes office supplies and stationeryearns high profits but is predicted to decline as the world grows more digital. With a 77% global market share for sticky notes, companies like Post-it have a strong hold on consumers' minds. Customers may trade down for less expensive options, but no single product in the consumer segment controls the majority of sales. Slow technological advancements in many of its markets are the reason for 3M's low risk of obsolescence. For instance, only slight, incremental technological advancements have been made during the more than 120 years that 3M's abrasives business has been in operation. Price is a secondary consideration behind factors like product availability, defect rate, and customer support because 3M's non-consumer products make up a small portion of a customer's overall budget but have a high associated cost of failure. But over the past five years, 3M's organic growth has significantly slowed, forcing it to rely on acquisitions, which have had varying degrees of success. Acquisitions that have fallen short of growth expectations include Capital Safety and Scott Safety, as well as M*Modal, a sizable purchase of what the company considers to be a weakly competitive company. The company may be having trouble passing on rising input costs to customers, which is why the decline in organic growth and declining gross margins are concerning. Many of 3M's products have been surpassed by rivals, who have gradually eroded its market share. Quantitative returns have also demonstrated competitive disruption, with peers' excess margins decreasing. Declining excess returns on capital are a result of 3M's large acquisitions and waning earning power. The remaining liabilities of 3M, including property damage, environmental, personal injury, and non-US-based damages, come to about $10 billion in the worst-case scenario. 3M would still easily surpass its hurdle rate and generate low-double-digit returns in such a scenario. In the worst-case situation, though, 3M's legal obligations might outweigh its assessment of the company's equity worth. Due to its cost advantage and intangible assets, 3M's transportation safety division, which is well-known for producing reflective road signage, has a narrow moat. The division's products are essential to maintaining driver safety, and 3M's size and pooled technology help to sustain its technological superiority and cost advantage. The division's products divert attention from price by saving customers more money than the product itself costs. According to a 2016 study by the US Department of Transportation, for every $1 invested in a sign upgrade program, $53 in lower crash costs were to the safety and industrial segment, which has historically produced high-teens returns on invested capital, the transportation and electronics segment sells a larger percentage of its products directly to consumers. With an average return on invested capital in the mid to high 20s, 3M's consumer segment is the company's only wide-moat segment and yields the highest returns. Because of its powerful brands and cost advantage from economies of scale and scope, the home, health, and auto care division deserves a wide moat rating. Another benefit for leading consumer brands is that they continue to dominate both digital and physical retail shelf space. Intrinsic Valuation Based on the time value of money and a positive assessment of 3M's long-term margin and revenue growth prospects, the company's intrinsic value stands at $93.82 per share making it significantly overvalued. In comparison to its peers in the US multi-industrial category, the company is valued at 13 times 2025 adjusted EPS, which represents a substantial discount. The contradiction could be explained by the stagnant free cashflow generated by 3M past few years. This was primarily due to the increased Capex investments and unchanged dividend payouts past few years which has hurt their free cash flow generation. And the GF valuation puts a great weightage to free cash flow generation, as it should. However, the consistently improving operating margin makes a strong argument why 3M's stock trades at such a low P/E. Over the long run, 3M's top line is anticipated to grow organically by 2%3% due to share buybacks, operating leverage margin improvements, and efficiency gains.3M is confident in its liquidity position to fund its dividend and no longer needs to take on additional debt, despite the company's unimpressive growth profile and legal uncertainties. The company broke its 64-year dividend growth streak to pay for its legal settlements, and in the worst-case scenario, it is expected to face nearly $10 billion more in PFAS-related legal the company continues to reduce its portfolio, 3M's more confident investments, like automotive electrification, should pay off. It is anticipated that the company's core businessespersonal protective equipment (PPE), industrial adhesives, automotive, and home improvement productswill continue to contribute and, in their opinion, grow more quickly than the GDP. Growing employee health and safety laws as well as increased manufacturing and construction activity in developing nations are driving the PPE market. Investment Downsides Because of the uncertainty surrounding potential future litigation pertaining to PFAS, a group of approximately 15,000 chemicals, 3M has been assigned a Very High Uncertainty Rating. More than 98% of Americans' blood and the water supplies in the US and Europe contain PFAS. Even though 3M intends to stop producing PFAS by 2025, it might continue to use PFAS-containing supplies after that year. Personal injuries, which could be substantial given the link between PFAS and high cholesterol, thyroid disorders, childhood developmental problems, and an elevated risk of cancer, are not taken into consideration in current settlements. According to a study by Obsekov, Kahn, and Trasande, the annual health costs in the US alone linked to PFAS exposure have an upper bound of $62.6 billion and a lower bound of $5.5 billion. Although estimating 3M's legal risks is extremely uncertain, both of the current settlements can be absorbed by the balance sheet. Since 1970, 3M has developed a risky practice of stifling negative research, which calls into question the company's culture and possible hidden hazards. Portfolio Management Over the past 20 years, 3M's R&D expenditures have stayed consistent at about 6% of sales, but the company's return on investment has fluctuated. 3M continues to prioritize above-average spending on product innovation, as evidenced by peer R&D spending, which averages about 3.5% of sales. The business has occasionally made acquisitions with subpar outcomes, but it could do better by taking advantage of the fragmented nature of many markets. Since 3M's healthcare division had the lowest return on investment and the fewest manufacturing synergies with other divisions, it was a smart decision to spin it off. In an effort to improve operational efficiency, the company has also taken a variety of actions, such as mass layoffs and a reduction in the footprint of its corporate and manufacturing buildings. The fair value estimate has decreased as a result of 3M's 1.8% annual share count reduction over the past 20 years. Because end markets are mature and there are significant legal uncertainties, 3M's revised dividend payout ratio of about 40% is appropriate. With 3M's remaining 20% stake and a $7.7 billion "midnight" dividend from Solventum, 3M should have enough cash on hand to cover its legal obligations and pay its updated dividend. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Solventum's projected $100M tariff hit prevents earnings increase
This story was originally published on MedTech Dive. To receive daily news and insights, subscribe to our free daily MedTech Dive newsletter. By the numbers Q1 net sales: $2.07 billion 2.6% increase year over year Net income: $137 million 42% decrease year-over-year 3M spinout Solventum has estimated that tariffs will wipe $80 million to $100 million from its earnings this year. The company made the prediction during a first-quarter earnings call on Thursday. Solventum is assuming China has a 125% tariff on U.S. imports. The tariff on goods flowing from the U.S. to China accounts for half of the forecast impact. Solventum is also assuming that the 10% tariff on goods traded between the U.S. and Europe stays in place and does not rise. That tariff represents one-third of the forecast impact. CFO Wayde McMillan said on an earnings call that 'minimal imports from China to the U.S.' and trade between the U.S. and Mexico and Canada makes up the rest of the anticipated impact. The company has received exemptions under the United States-Mexico-Canada Agreement to mitigate the impact of tariffs on trade within North America. The exemptions are one of several mitigating actions Solventum has taken. McMillan said the company is continuing to optimize inventory and its teams are 'heavily focused on sourcing options all across our supply chain.' Solventum is also looking at 'thoughtful pricing strategies where we think that makes sense for the long-term business,' the CFO said. CEO Bryan Hanson added on the call that tariffs have given 'a higher sense of urgency' to the company's existing efforts to regionalize its supply chains. The potential to reduce the impact of tariffs by rethinking supply and pricing, as well as by working with trade associations to secure exemptions, led Hanson to discourage analysts from extrapolating the 2026 impact from this year's figures. Even so, Stifel analysts lowered their forecasts for 2026 to reflect tariffs. The analysts said in a note to investors that, although Solventum offered no formal guidance for 2026, 'it feels like a sensible approach to contemplate at least some impact given the uncertain tariff environment.' Hanson said the anticipated impact of tariffs this year prevented Solventum from raising its earnings per share guidance. Solventum raised its full-year organic revenue guidance but kept its EPS forecast of $5.45 to $5.65. The company expects tariffs to hurt EPS by a range of 35 cents to 45 cents. Recommended Reading Solventum cuts 800 positions Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
STERIS (STE) Q1 Earnings: What To Expect
Medical equipment and services company Steris (NYSE:STE). will be reporting earnings tomorrow after the bell. Here's what investors should know. STERIS missed analysts' revenue expectations by 0.6% last quarter, reporting revenues of $1.37 billion, up 5.6% year on year. It was a decent quarter for the company, with full-year EPS guidance in line with analysts' estimates. Is STERIS a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting STERIS's revenue to grow 3.8% year on year to $1.47 billion, slowing from the 10.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $2.60 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. STERIS has missed Wall Street's revenue estimates six times over the last two years. Looking at STERIS's peers in the surgical equipment & consumables - diversified segment, some have already reported their Q1 results, giving us a hint as to what we can expect. CONMED delivered year-on-year revenue growth of 2.9%, beating analysts' expectations by 2.6%, and Solventum reported revenues up 2.7%, topping estimates by 2.7%. CONMED traded up 16.9% following the results while Solventum was also up 5.2%. Read our full analysis of CONMED's results here and Solventum's results here. There has been positive sentiment among investors in the surgical equipment & consumables - diversified segment, with share prices up 4.5% on average over the last month. STERIS is up 4.1% during the same time and is heading into earnings with an average analyst price target of $251.36 (compared to the current share price of $233.10). When a company has more cash than it knows what to do with, buying back its own shares can make a lot of sense–as long as the price is right. Luckily, we've found one, a low-priced stock that is gushing free cash flow AND buying back shares. Click here to claim your Special Free Report on a fallen angel growth story that is already recovering from a setback. Sign in to access your portfolio
