3M stock price forecast ahead of earnings: will it surge to $200?

3M stock price has wavered in the past few months as investors focus on the company’s turnaround efforts. MMM was trading at $167.80 on Tuesday, a few points below the December high of $174.53. This article provides a forecast ahead of the upcoming earnings.

3M turnaround is continuing 

3M is a top American industrial company that makes products across various industries like safety & industrial, transportation & electronics, and consumer.

While it is known for its Post-it notes, the company makes over 60,000 products that are used widely in the United States and other countries. 

Its other products are bandages, cleaning pads and sponges, air filters for furnaces, abrasives, coatings, and automotive products.

The company is now going through a turnaround strategy after it faced major fines, including a $12 billion one to compensate victims of its forever chemicals, and a $6 billion one to the US military for selling its faulty earplugs. It will continue making these payments in the next few years, which will cap its profitability.

There are signs that 3M’s business is improving as key segments continue growing. 

MMM earnings are coming

The most recent results showed that the company’s revenue rose by 3.2% in the third quarter to $6.3 billion, while its operating margin rose to 24.7% from the previous 23%. Its margins benefited from its growth, productivity, and its ongoing restructuring.

Most of its businesses returned to growth. For example, the safety and industrial segment made $2.9 billion, up by 4.1% YoY, with most of the growth coming from industrial adhesives, tapes, personal safety, and abrasives.

The transportation and electronics business made over $1.99 billion, up from $1.91 billion, with the key growth areas being in electronics, transportation, advanced materials, and aerospace. 

These results showed that its consumer division revenue was flat, with two of its four divisions growing.

READ MORE: 3M is a ‘growth stock’ after Q4 earnings, says Cramer: should you invest?

The company also boosted its forward guidance for the year. It boosted its organic sales guidance to over 2% and its operating margin from between 150 to 200 basis points to between 180 and 200 basis points.

3M also boosted its forward guidance of its earnings-per-share to between $7.95 and $8.05, helped by the management’s execution in a tough environment.

Analysts now expect that the upcoming financial results will show that its upcoming revenue will come in at $6.01 billion, up by 3.45% YoY. Its EPS is expected to come in at $1.8 from $1.68 in the same period a year earlier.

Most importantly, analysts expect that its annual revenue will be over $25 billion this year, up by 3.23% YoY. The earnings-per-share (EPS) is expected to be $8.61, up from the previous $8.02.

The company is also relatively undervalued, with a forward price-to-earnings ratio of 20, lower than the sector median of 22.4. 

3M stock price technical analysis 

The three-day chart shows that the 3M share price has rebounded in the past few years as the turnaround efforts continued.

It has formed an ascending channel and is nearing its upper side. Also, the stock has remained above the 50-day and 100-day Exponential Moving Averages.

It has moved above the Supertrend indicator, while the Stochastic Oscillator has continued rising. Therefore, the most likely scenario is where it continues rising as bulls target the key resistance level at $200.

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