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.
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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