KeyBanc Capital Markets has raised its rating on Solventum to Overweight from Sector Weight, arguing that recent underperformance across the medical technology sector has compressed valuations and opened up stock-picking opportunities. The firm used a $97 price target for Solventum, which it derived from a multiple of 14 times the company’s projected 2027 earnings. By KeyBanc’s math, Solventum currently trades at 11.4 times that same 2027 earnings estimate, placing it in the bottom quintile of its peer cohort.
The upgrade comes as KeyBanc characterizes fourth-quarter metrics across MedTech as broadly supportive. The firm highlighted a pattern of largely positive preannouncements from companies, constructive comments from early bellwethers including Johnson & Johnson and Abbott, and encouraging takeaways from recent meetings with industry participants. KeyBanc noted that the sub-sector underperformed the broader market in both 2024 and 2025, which has eroded much of the valuation premium the sector historically commanded.
KeyBanc points to a notable reset in relative valuations. The S&P 1500 Healthcare Equipment and Supplies Index now trades at about a 2% premium to the S&P 500 on a next-twelve-months price-to-earnings basis, according to the firm. That contrasts with a five-year average premium of roughly 25 percent. KeyBanc said the valuation reset, together with a steady utilization backdrop, supports selective exposure to MedTech names heading into 2026.
On operational trends, KeyBanc’s proprietary data indicate hospital volumes continued to grow in the mid- to high-single-digit range during the second half of 2025, though growth moderated somewhat toward the end of the year. The brokerage observed that most companies that issued fourth-quarter revenue preannouncements reported results above consensus, and that management commentary about demand trends was generally stable.
KeyBanc also expects capital markets activity to gain momentum in 2026 after a tariff-driven pause earlier in 2025. The firm cited a rebound in deal flow during the second half of last year and suggested that recent large transactions point toward a more active M&A environment going forward.
Regarding Solventum specifically, KeyBanc said the company’s spin-off from 3M is progressing well and that confidence is growing in the company’s ability to meet long-term targets. The brokerage pointed to new product launches, growth-accretive acquisitions, and a more offensive capital allocation strategy as constructive developments. KeyBanc added that concerns surrounding Solventum’s 2026 guidance may be overstated and that these factors could enable the company to move closer to its 4 to 5 percent organic growth target ahead of its 2028 timeline.
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Conclusion - KeyBanc’s upgrade of Solventum reflects a view that compressed MedTech valuations, stable utilization trends, better-than-expected fourth-quarter preannouncements, and improving deal flow create selective opportunities in 2026. For Solventum, the brokerage’s confidence in the spin-off process, product pipeline, acquisitions, and capital allocation underlies its Overweight rating and $97 price target based on 14 times 2027 earnings.