3M Stock: Could December Redeem Its Year?

So far, 3M stock has had a forgettable year. The stock, which has lost 11.7% so far in 2019, lagging massively compared to the S&P 500’s (SPY) 24.2% gains during the same period. While the S&P 500 is close to its all-time-high, 3M (MMM) stock is closer to its 52-week low.

After gaining over 9% in the first quarter, 3M stock posted quarterly losses in Q2 and Q3. So far in the current quarter, 3M stock is up marginally.

However, December hasn’t started well for MMM. 3M lost 0.9% yesterday and was down 1.8% at 9:45 AM ET today. The S&P 500 was down 1.3% at that time. Other industrials were also in the red, with GE trading 2.9% lower and Caterpillar following GE. Will the rest of the December pull 3M up? Let’s see.

What are analysts saying about 3M stock?

Analysts are not too excited about the stock’s prospects. Out of 19 analysts surveyed by Reuters, only three give the stock a “buy” while four gave it a “sell.” The remaining 12 analysts gave 3M a “hold” rating.

The median and average price of $170 means Wall Street believes that there is only marginal upside potential for 3M stock over the next 12 months. Keeping that in mind, Wall Street is not really expecting fireworks from 3M stock this month. In fact, the uncertainties related to the trade war may put pressure on 3M stock.

Will the trade war spoil Christmas for 3M?

On October 24, 3M CEO Mike Roman noted during the company’s Q3 earnings call that the global macroeconomic environment remains challenging. 3M’s sales from China and Hong Kong fell 9.4% during the third quarter, leading to a 5% decline in its Asia-Pacific revenues.

3M also lowered its Q4 and 2019 guidance. The company currently expects its Q4 adjusted EPS to be $2.20–$2.30 ($2.25 at the midpoint). For 2019, the company’s management lowered its EPS guidance to $8.99–$9.09 ($9.04 at the midpoint), which is below the low end of its previous guidance of $9.25–$9.75.

Trade deal hopes, which took the S&P 500 to its highest peak a few days ago, seem to be fading. Today, President Trump added to trade war concerns by saying, “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.”

We expect these trade war worries to badly hurt companies with exposure to China, as well as those with a global presence. 3M stock has a lot to lose from trade worries, which is evident in the stock’s underperformance in the market today.