1 Wall Street Analyst Thinks 3M Stock Is Going to $120. Is It a Buy?
Bank of America Securities recently upgraded 3M (NYSE: MMM), with analyst Andrew Obin changing the stock to a buy rating from neutral and hiking his share price target to $120 from $105. This represents a more than 19% premium over the next 12 months to the current stock price.
The key to the investment case for the stock involves recognizing that 3M reduced some uncertainty around several key issues overhanging it in recent years. For instance, 3M entered into a $10.3 billion settlement agreement with public water suppliers over its production of PFAS chemicals. It also entered into a $6 billion settlement with combat arms earplugs claimants. As such, investors have a clearer picture of the multiyear and multibillion payments 3M will need to make over the next decade.
In addition, 3M spun off its healthcare business, Solventum -- a move that will result in about $7.7 billion in cash payments to 3M. The company also retains a 19.9% stake in Solventum (currently worth $1.94 billion), which it can sell to raise additional cash. Furthermore, 3M cut its dividend, freeing up future cash resources to help grow the business.
Source Fool.com
