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RBC Capital Markets analyst Deane Dray reiterated an Underperform rating on the shares of 3M Co (NYSE:MMM) and raised the price target from $93.00 to $95.00.
According to the analyst, investors did not seem to mind that 3M beat consensus EPS by 25 cents but only boosted 2024 guidance by 10 cents.
But what was noticed was that the new CEO Bill Brown delivered an impressive recitation of all the failings at the once-revered 3M.
While the analyst acknowledges that Brown's comments sparked confidence in the turnaround story, but 3M still has the overhang of multi-billion dollar remaining/ unaddressed PFAS liabilities.
Also, while 3M has some new positive momentum with the leadership change, the analyst still believes the ultimate cost of PFAS liabilities remain a sizable risk to cash flow and implied valuation.
Related: 3M To Focus On Operations, Innovation To Revive Growth, Says New CEO
Such a sweeping operational shakeup could prove highly disruptive, opines the analyst.
The analyst has raised the 2024 EPS estimate to $7.25 and the price target by $2 to $95 on a refreshed SOP.
In the analyst's view, 3M is still a largely insular organization and could be resistant to sweeping operational and cultural changes.
Also, BofA Securities analyst Andrew Obin maintained 3M with a Buy and raised the price target from $120 to $143.
Barclays analyst Julian Mitchell maintained 3M with an Overweight and raised the price target from $120 to $145.
Price Action: MMM shares are trading lower by 1.87% at $124.78 at last check Monday.
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Posted In: MMM
