3M: Legal Challenges and Analyst Confidence

Shares of materials giant 3M (ticker: MMM) have long been shunned by Wall Street due to ongoing legal issues. However, recent settlement announcements have sparked a positive shift in sentiment among analysts.

Morgan Stanley analyst Joshua Pokrzywinski has taken note of these developments and, as a result, upgraded his rating on 3M shares from Sell to Hold. He has also raised his price target to $113 per share, up from $102.

In response to this ratings upgrade, shares of 3M saw a modest increase of 0.6% in premarket trading. The broader market also showed positive signs, with S&P 500 futures up 0.2% and Dow Jones Industrial Average futures up 0.4%.

Pokrzywinski’s decision to upgrade the stock is primarily driven by the resolution of legal liabilities and the recent settlements reached by 3M. In June, the company announced a significant $12.5 billion settlement with U.S. water providers for the remediation of PFAS chemicals that contaminated water supplies. Additionally, this week, 3M disclosed a $6 billion settlement tied to potentially defective earplugs sold to the military.

Despite the challenges 3M has faced with its legal troubles, the tide may be turning as analysts like Pokrzywinski take note of the company’s efforts to address these issues. Investors will now be watching closely to see if this positive momentum continues for 3M.

3M Faces Personal Injury Litigation over PFAS

Recent settlements have brought some certainty to the ongoing personal injury litigation that 3M is facing over PFAS. While the company will be spending billions to address these issues, the size of the problem was uncertain before the settlements were announced, leaving Wall Street and investors in the dark. However, according to Pokrzywinski, these settlements have provided a more balanced risk/reward profile for the stock.

Upgrade Linked to Settlements

There have been several upgrades linked to these settlements. After the PFAS settlement, BofA Securities analyst Andrew Obin upgraded 3M shares from Sell to Hold. Similarly, Wolfe Research analyst Nigel Coe upgraded shares from Sell to Hold after the recent earplug settlement.

Noteworthy Upgrades

Although none of these upgrades are to Buy, they are still worth noting. Prior to the PFAS settlement, 3M shares had zero Buy ratings. In comparison, the average Buy-rating ratio for stocks in the S&P 500 is around 55%, translating to approximately 11 Buy ratings on average.

Decrease in Sell Ratings

Furthermore, before the settlements, 28% of analysts covering 3M stock rated it as Sell. In contrast, the average Sell-rating ratio for an S&P stock is roughly 7%. Normally, one or two Sell ratings are assigned to an average S&P stock.

These recent developments bring a flicker of hope for 3M as it navigates through its ongoing personal injury litigation over PFAS. The settlements have not only provided some much-needed certainty but have also garnered attention from analysts who are starting to reevaluate their previous ratings for the company’s stock.

The current state of 3M stock may not be unanimous among analysts, but there has been a noticeable shift in sentiment recently. While no analysts have upgraded the stock to a Buy-rating, the number of Sell-ratings has decreased from five to just two. This represents approximately 11% of all analysts covering 3M.

A total of nineteen analysts are closely monitoring 3M, as reported by FactSet. Though the majority remains reluctant to endorse a Buy-rating, the tide seems to be turning on Wall Street, with growing optimism surrounding 3M shares.