Wolfe Research‘s latest analysis of 3M Company (NYSE:MMM) marked a significant upgrade in the company’s outlook, shifting the rating from “Peer Perform” to “Outperform” and establishing a robust year-end 2024 price target of $125 per share.
What To Know: Key to Wolfe Research analyst Nigel Coe’s optimistic outlook is the appointment of Bill Brown as CEO of 3M, renowned for his successful tenure at L3Harris.
Coe believes Brown’s operational expertise will drive margin improvements and potentially expand the company’s valuation multiple, setting the stage for enhanced profitability in the medium term.
Following the spin-off of 3M’s Healthcare business (SOLV), the Wolfe Research analyst conducted a detailed reassessment, raising the firm’s fiscal year 2024 EPS estimate to the upper end of the range of $6.80 to $7.30. Looking further ahead, Coe sees a path to EPS of $8.73 by 2026, reflecting a high single-digit compound annual growth rate without overly aggressive operational assumptions.
Despite acknowledging challenges such as modest growth trends and significant legal liabilities totaling $21 billion, Coe asserted that 3M’s current valuation remains attractively discounted.
The Wolfe Research analyst’s $125 price target is based on a conservative 13.5x multiple of estimated 2025 EBITDA. The upgrade follows the analyst firm’s previous upgrade from “Underperform” in August 2023, underscoring newfound confidence in the company’s prospects.
MMM Price Action: 3M shares closed Thursday up 0.34% at $101.55, according to Benzinga Pro.
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