Market News

New Problems Mount for 3M (NYSE:MMM)

Story Highlights

3M is struggling due to weakening sales. A key investor is raising concern over the company’s performance.

3M (NYSE:MMM) is already grappling with weakening sales and litigations. Adding to its problems, one of its top investors, Bert Flossbach, the co-founder and senior portfolio manager of the German mutual-fund firm Flossbach von Storch AG, has criticized 3M’s CEO Mike Roman’s leadership, a Wall Street Journal report highlighted.

Per the report, Flossbach highlighted that 3M’s sales and profitability have been disappointing since Roman took over as CEO in 2018. He further pointed out that 3M delivered a total shareholder return of negative 32% during the same time, which compares unfavorably with the S&P 500’s gain of 62%. 

The graph below shows the performance of 3M stock relative to the SPDR S&P 500 ETF Trust (SPY), a proxy for the S&P 500 Index (SPX), in the last five years. The graph shows that 3M has significantly underperformed the broader market during that time. 

The continued decline in disposable respirator demand, the exit from Russia, and lower consumer discretionary spending will likely weigh on its financial performance in 2023. 

3M expects its top line to decline by 2-6% in 2023. Moreover, lower sales and the negative impact of inflation are likely to hurt its earnings. The company projects its adjusted EPS to be in the range of $8.50 to $9.00, compared to $9.88 in 2022. 

What is 3M’s Price Target?

Due to the ongoing challenges, analysts expect 3M stock to underperform in the short term. Six analysts have maintained a Hold rating on 3M stock. Meanwhile, four recommend a Sell. Overall, MMM stock sports a Moderate Sell consensus rating on TipRanks. Further, analysts’ average price target of $115.20 implies 4.23% downside potential. 

3M also carries a negative indicator from hedge fund managers, who lowered their exposure to the stock. Meanwhile, it has an Underperform Smart Score of two on TipRanks. 


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