Morgan Stanley upgraded Solventum Corporation (NYSE:SOLV) from Equalweight to Overweight, setting a new price target of $103, as the firm sees underappreciated upside in the company’s margin potential and earnings trajectory.

The upgrade reflects growing confidence in Solventum’s ability to streamline operations and improve profitability following the sale of its Personal & Food Safety (P&F) segment and a strategic debt reduction. According to Morgan Stanley, these moves create room for meaningful value creation in the coming years.

The firm believes Solventum can achieve organic growth of around 4% and sees a bullish path to nearly $9 in earnings per share by 2028. Management has made faster-than-expected progress in optimizing the business, and Morgan Stanley views current market expectations as overly conservative, particularly when it comes to margin improvement.

With operational efficiencies still unfolding and consensus estimates lagging behind what the firm sees as achievable, Morgan Stanley sees a favorable risk-reward setup and has moved to an Overweight rating on Solventum.