On Tuesday, CFRA, a prominent financial research firm, upgraded its price target on shares of 3M (NYSE:MMM) to $165.00, up from the previous target of $140.00, while maintaining a Buy rating on the stock. The adjustment follows 3M's third-quarter earnings, which outperformed expectations set by both the consensus and CFRA.
The company's operating earnings per share (EPS) saw an 18% year-over-year increase, excluding contributions from Solventum, reaching $1.98. This performance highlights 3M's strategic emphasis on driving organic revenue growth and improving profitability through restructuring and cost containment efforts.
3M's organic sales continued to grow, registering a 1% year-over-year increase, with notable high single-digit growth in the company's electronic and advanced material businesses. The company is actively conducting a review of its portfolio and has begun the process of divesting a few small non-core businesses. CFRA views these steps as positive actions that will be key in revitalizing 3M's organic growth by shedding slower growth segments.
The new 12-month price target of $165 is based on a valuation of 20.6 times CFRA's projected EPS for 2025, which has been raised to $8.02 from the previous forecast of $7.82. The EPS estimate for 2024 remains unchanged at $7.30. CFRA considers the consensus EPS outlook for 2025 to be conservative, especially in light of 3M's accelerated pace of product launches, which the firm believes could further drive the company's growth.
In other recent news, 3M Company (NYSE:MMM) has been the focus of several significant developments. The company reported a strong second quarter with non-GAAP earnings per share increasing by 40% to $1.93 and a modest 1% growth in organic revenue. On top of this, the Board of Directors declared a quarterly dividend of $0.70 per share for the third quarter of 2024.
In a noteworthy product launch, 3M introduced a solar charging wireless Bluetooth hearing protector, the 3M™ WorkTunes™ Connect + Solar, integrating Powerfoyle™ solar cell technology. This is the first of its kind in the consumer market.
Shifting to analyst ratings, Mizuho Securities increased its price target for 3M from $105 to $146, maintaining a neutral stance. Deutsche Bank upgraded 3M from Hold to Buy with a new price target of $150. However, Morgan Stanley initiated coverage with an Underweight rating, citing potential challenges in exceeding current growth levels.
In terms of personnel, 3M announced the appointment of Anurag Maheshwari as the new Chief Financial Officer, effective from September 1, 2024. The company also addressed a mine safety incident at its quarry in Little Rock, Arkansas, taking corrective measures to rectify the situation, with no injuries reported.
InvestingPro Insights
Recent data from InvestingPro adds depth to CFRA's optimistic outlook on 3M. The company's market capitalization stands at $73.57 billion, reflecting its significant presence in the industrial sector. 3M's P/E ratio (adjusted) of 13.58 for the last twelve months as of Q2 2024 suggests that the stock may be undervalued relative to its earnings, aligning with CFRA's bullish stance.
InvestingPro Tips highlight 3M's strong profitability, with a gross profit margin of 44.76% for the last twelve months as of Q2 2024. This robust margin supports the company's ability to invest in new product launches and restructuring efforts, as noted in CFRA's analysis. Additionally, 3M's dividend yield of 2.08% may appeal to income-focused investors, although it's worth noting that dividend growth has been negative in the recent period.
The stock's impressive performance is evident in its year-to-date price total return of 51.83%, significantly outpacing the broader market. This aligns with CFRA's decision to raise the price target and maintain a Buy rating. For investors seeking more comprehensive analysis, InvestingPro offers 18 additional tips for 3M, providing a deeper understanding of the company's financial health and market position.
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