3M shares gain after Bank of America upgrades rating

Investing.com -- Shares in 3M (NYSE: MMM) rose on Tuesday after analysts at Bank of America upgraded their rating of the stock to Neutral from Underperform, citing a range of "near-term positives."

In a note to clients, the analysts highlighted the industrial group's settlement in June with a number of U.S. public water systems over claims related to so-called "forever chemicals," which do not break down easily in human bodies or the environment.

The more than $10 billion size of the agreement, the analysts said, was smaller than the expectations of legal experts. They added that "historically, stocks with litigation risks have performed well after initial settlement announcements."

Meanwhile, the analysts argued that 3M's plans to cut headcount to limit costs and offset waning demand for consumer electronics was "underappreciated." The company's subseqent financial guidance for the second half of 2023 and its 2024 financial year are "conservative," they said.

3M's planned spin-off of its health-care business should also "unlock value," the Bank of America analysts noted.

Shares in 3M have dropped by more than 24% over the past year, with analysts fretting over both the "forever chemical" litigation and personal injury claims linked to earplugs made by affiliate Aearo Technologies.

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