3M (MMM) Bullish Stance Reiterated at Nomura

Nomura Securities analyst Shannon O'Callaghan reiterated a Buy rating and $150 price target on 3M (NYSE: MMM) saying the company is still mixing a better formula.

O'Callaghan commented, "Back in December, we upgraded 3M with a view that the company could take a more aggressive stance on capital allocation, and that has begun with $1.7B of share repurchase in each of the last two quarters, and an increase in debt. But, after recently spending a couple of days with management, there are several factors we view as underappreciated: 1) the driver of management’s plan to add debt is not to boost EPS with buyback (though that is a nice side effect), but rather to lower 3M’s cost of capital; 2) this suggests that the buyback will not slow even if organic earnings surprise on the upside; and 3) another use of added debt is expected to be medium and larger acquisitions, which is a capability historically missing at 3M that could further benefit the P/E. We think 3M could be changing from a sleepy mid-single-digit EPS grower to a double-digit EPS grower with drivers of potential upside."

For an analyst ratings summary and ratings history on 3M click here. For more ratings news on 3M click here.

Shares of 3M closed at $141.60 yesterday.

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