US Electrical Equipment & Multi-Industry: EE/MI Morning Note - IR ready for liftoff? +MMM & SWK previews & Macro

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US Electrical Equipment & Multi-Industry: EE/MI Morning Note - IR ready for liftoff? +MMM & SWK previews & Macro

upside could be delayed as short

cycle improvement (PMIs, utilization rates) takes a couple quarters to flow through

to compressor demand.

MMM preview- We model 2Q EPS of $2.25, above consensus of $2.23. Our forecast

assumes 3.5% organic sales growth and flat margin year over year given tariff comps

and stranded costs. At the segment level we expect organic sales growth to be led by

Safety & Industrial +5.5%, followed by Transportation & Electronics +3% and

Consumer flat. End markets that have been strong should remain strong, including

industrial adhesives, electrical, and abrasives, while other areas are stabilizing. We think

that 3M can maintain 4% organic sales growth in 2H26 despite tougher overall comps

as demand momentum continues, allowing growth to compound in better performing

businesses, while business lines such as roofing granules and auto aftermarket benefit

from easier comps. Price should also increase in 2H from 1H. On margins, we expect

incrementals to increase from 25-30% in 1H to about 60% in 2H, benefitting from

volume leverage, price, productivity, and easier tariff comps. The bottom line is we think

3M's results are improving, led by better growth, which is an encouraging sign given low

valuation. Maintain Buy.

SWK preview- Heading into 2Q, we model an in line EPS result of $1.20, forecasting

flat total sales growth (2% organic growth offset by about 3% M&A headwind). Overall,

we don’t think there is much incremental change in the overall outlook for Stanley

versus prior expectations. We still expect T&O volumes to be positive year over year in

2H, in the low single digit range, and for there to be solid margin expansion as the