Here's Why 3M Stock Could Soar by at Least 28% Based on Management's Plans
By now, investors in 3M (NYSE: MMM) will know that the stock has appreciated significantly after the second-quarter earnings presentation. While the full-year earnings outlook improved slightly, the increase in the stock price is probably more attributable to new CEO William Brown's outline of his plan to generate value for investors. I want to focus on one essential part of his plans, which is that investors could lead to a substantial increase in the share price.
Brown's comprehensive presentation stressed the need for 3M to grow organically and improve margin performance by rejuvenating its research & development (R&D) activity to generate new product introductions (NPI). That aim fits the 3M model of R&D to create differentiated products that command pricing power and lead to volume growth. In turn, the volume growth leads to margin expansion due to building production scale and lowering cost per unit.
That said, it will take time for a change in R&D to come to fruition, so in the near term, Brown said the focus will be on "commercial excellence to sell more of what we currently offer, and that means better sales force and distributor effectiveness."
Source Fool.com
