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3M: An Update on Analysts’ View

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Analysts’ consensus on 3M

In the past few months, the number of analysts tracking 3M (MMM) increased to 16 from 14. Among the analysts, 38% recommended the stock as a “buy,” 37% recommended the stock as a “hold,” and 25% recommended the stock as a “sell.”

Analysts’ consensus indicates a target price of $245.90, which implies a return potential of 3.1% over the closing price as of March 7, 2018. Analysts’ consensus target price for 3M increased from $219.50 to the current price in three months, which indicates bullishness in the stock.

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3M reported strong 4Q17 earnings and exceeded analysts’ estimates. 3M also made an upward revision to its fiscal 2018 generally accepted accounting principles earnings per share to $10.20–$10.70 from the previous guidance of $9.60–$10.00. However, the lawsuit settlement with the State of Minnesota related to a perfluorinated compound present in the environment could have a negative impact of $1.10–$1.15 per share. As a result, analysts’ opinions are widely divided.

Individual brokerage firms’ views

  • Barclays (BCS) rated 3M as “underweight” and recommended a target price of $235. The stock is trading marginally above the recommended target price as of March 7, 2018.
  • Deutsche Bank (DB) rated 3M as a “buy” with a target price of $275.00, which implies a return potential of 16.70% over the closing price as of March 7, 2018.
  • Royal Bank of Canada (RY) rated 3M as a “hold” with a target price of $254.0, which implies a return potential of 7.80% over the closing price as of March 7, 2018.

Investors can hold 3M indirectly by investing in the iShares U.S. Industrials ETF (IYJ), which has 4.1% of its portfolio in 3M as of March 7, 2018.

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