3M Leads Dow Stocks After Massive Earnings Beat
3M stock is headed toward its best day ever after the industrial conglomerate's impressive earnings report. Here's what you need to know.
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3M (MMM) stock is soaring Friday to lead its fellow Dow Jones stocks and notch its biggest one-day price gain on record. The impressive pop comes after the Post-it maker topped revenue and earnings expectations for its second quarter and updated its full-year profit forecast.
In the three months ended June 30, 3M's revenue decreased 0.5% year-over-year to $6.3 billion, including declines in all three of its major business segments. Its earnings per share (EPS) were up 38.8% from the year-ago period to $1.93.
"We delivered another strong quarter with adjusted earnings growth up double-digits and robust cash generation," said 3M CEO William Brown in a statement. "As I look ahead, I am focused on three priorities: driving sustained organic revenue growth, increasing operational performance, and effectively deploying capital."
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The results handily beat analysts' expectations. Wall Street was anticipating revenue of $5.9 billion and earnings of $1.68 per share, according to Yahoo Finance.
As a result of its stronger-than-expected performance in the first half of the year, 3M raised the low end of its full-year profit forecast. The company now anticipates earnings per share in the range of $7 to $7.30, up from its previous forecast of $6.80 to $7.30.
Is 3M stock a buy, sell or hold?
Despite 3M's impressive 35% year-to-date gain, analysts are on the sidelines when it comes to the blue chip stock.
According to S&P Global Market Intelligence, the average analyst target price for MMM stock is $110.23, representing a discount of about 12% to current levels. Additionally, the consensus recommendation is a Hold. However, analysts may revise their targets higher following 3M's better-than-expected performance in the second quarter.
Financial services firm UBS Global Research is one of those with a Neutral rating (equivalent to a Hold) and a $100 price target on 3M stock.
"A new CEO, progress on PFAS clean-up, and margin execution are positives for the stock, however our optimism is tempered by continued topline weakness, uncertainty around remaining PFAS liabilities (particularly state Attorneys General & personal injury) and constrained free cash flow," UBS analyst Damian Karas said in a June 24 note.
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