First Read 3M Company: 2Q first look; Growth story activated

Research evidence excerpt

First Read 3M Company: 2Q first look; Growth story activated

Forecast returns

Forecast price appreciation 19.4%

Forecast dividend yield 2.0%

Forecast stock return 21.4%

Market return assumption 9.2%

Forecast excess return 12.2%

Company Description

3M is an industrial company with three segments: Safety & Industrial, Transportation &

Electronics, and Consumer.

Valuation Method and Risk Statement

Our price target is based on P/E.

Risks: The Electrical Equipment and Multi Industry sector faces a broad range of risks. It is

cyclical in nature with exposure to the underlying cycles inherent in everything from aviation,

auto, trucking and trains to construction and consumer electronics to mining, power, oil and

gas and more depending on the specific stock. EEMI companies are subject to risks associated

with unexpected changes in the underlying global macro environment, currency and interest

rate movements, commodity price inflation as well as company-specific risks from execution,

M&A, integration, labor relations, litigation (e.g., PFAS), and changes in the competitive or

regulatory environment. These changes can be in the form of product technology,

ecommerce and other digital disruption and/or channel disintermediation. Changes in the

overall macro environment can result from health emergencies such as COVID-19 and other

pandemics. Capacity and related pricing pressures are also a risk through the cycle. Finally,

these multinational companies are subject to policy changes taking place in the US and

internationally, including those related to environmental regulation and tariffs.

Company-specific risks include slower progress on resumption of growth, more legal outlays

than we estimate and mis-execution and persistently weak market trends.