New CEO, Bottoming Cycle, And Spin-Off Fuel Optimism For 3M, Analyst Upgrades Stock

Barclays analyst Julian Mitchell upgraded 3M Company MMM to Overweight from Equal Weight and raised the price target to $126 from $111.

The analyst is bullish on the stock partly due to a smaller headwind from estimated / unannounced non-debt / environmental liabilities. 

Also, the analyst said that the appointment of a new CEO (due to start in May) will likely yield a portfolio review and additional productivity measures / higher margins.

Moreover, the analyst stated that the company is further along in the bottoming demand phase of Short Cycle Industrial and Electronics markets, which comprise 35%-40% of 3M RemainCo’s sales, and the analyst is expecting a recovery in the remainder of 2024. 

Mitchell now estimates EPS of $9.88 in 2024 and $7.64 in 2025.

Today, Solventum said it expects to spin off from 3M on April 1, 2024, and will be listed on the New York Stock Exchange as “SOLV.”

Solventum expects organic revenue growth of -2% to 0%, adjusted EPS of $6.10-$6.40, and free cash flow of $700 million-$800 million.

In January, 3M fourth-quarter FY23 adjusted EPS that beat estimates at $2.42, while adjusted net sales of $7.69 billion slightly missed expectations.

Price Action: MMM shares are up 0.10% at $104.90 on the last check Tuesday.

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