3M: share price advances, a 'buy idea' according to Deutsche Bank
January 13, 2025 at 10:41 am EST
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3M shares bucked Wall Street's trend on Monday, posting one of the Dow Jones index's strongest gains on the back of favorable comments from Deutsche Bank, which described the stock as a "buy idea" in view of the American industrial group's forthcoming quarterly results.
While the stock has moved without much direction since the publication of its Q3 accounts, the research firm believes that the publication of Q4, scheduled for February 26, could be a positive catalyst.
The analyst says he expects the conglomerate to unveil a multi-year action plan to improve its operating margin, with the aim of achieving a figure close to 30% over the long term, compared with just over 20% today.
At the same time, adds Deutsche Bank, 3M could be more ambitious in terms of organic growth, by communicating a target higher than its historical average (usually between 2% and 4%).
According to the professional, 3M is likely to publish Q4 results above consensus, but could nevertheless communicate lower-than-expected forecasts for 2025, a prospect which he believes is nevertheless built into current share prices.
On the other hand, he concludes, the market does not seem to be taking into account the possibility of further share buybacks this year.
Following these comments, 3M shares were up 0.4% on Monday morning on the New York Stock Exchange, compared with a gain of around 0.2% for the Dow.
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3M Company is an industrial group organized around four product families:
- industrial products, safety and graphics materials (33.5% of net sales including intra-group): abrasive products, adhesives, cleaners, air and liquid filtration systems, anti-slip coating products, fire protection systems, road signage products, etc. The group also provides display equipment and graphics systems;
- electronics and energy products (26%): interconnection products, connectors, optical components, etc.;
- healthcare products (25.1%): orthopedic, chirurgical and respiratory materials, feminine hygiene products, dental products, etc.;
- consumer goods (15.4%): adhesive tape, self-adhesive papers, filters, projectors, screen supports, etc.
Net sales are distributed geographically as follows: Americas (56.2%), Asia/Pacific (25.9%), and Europe/Middle East/Africa (17.9%).