Deutsche Bank Reiterates Buy and $70 PT on 3M (MMM)

Deutsche Bank reiterates its Buy rating and $70 price target on 3M (NYSE: MMM).

The firm calls 3M "a port in the storm"; Deutsche believes that "while not immune, 3M should be far more resilient than peers." Following recent meetings with 3M management, the firm believes that the company should be able to drive growth with innovation and outperform peers.

Deutsche notes that while 3M already trades at an 18% premium to the S&P 500 (versus a 5-year average of 11%), reflecting greater resiliency versus peers, it also points out that this premium will likely expand given:

• during the last recession ('01-'02) 3M traded as high as a 40% premium to the S&P 500
  
• 3M is far stronger than it was during the last recession with EBIT margins 200-300 basis points higher (22.3% in '08E) and ROIC 300 basis points higher (19.5% in '08E) and
  
• with 50% of its FX exposure hedged (vs. 0% at the last recession) 3M's earnings volatility is lower

With shares of 3M trading around $60.55 today, Deutsche's $70 price target represents potential price appreciation of more than 15% from current levels.

3M Company, together with its subsidiaries, operates as a diversified technology company worldwide.

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