3M's (MMM) forward valuation has increased in recent weeks, reflecting increased confidence in its self-improvement efforts, however, there is still considerable upside potential, UBS said in a note Sunday.

The analysts said that over the past 30 days, 3M shares have increased by 15%, compared to a 5% increase in the Industrial Select Sector SPDR Fund over the same period. This rise follows the company's successful clearance of its first major hurdle regarding its 2025 guidance last week. "But we think there's a lot more to go," they added.

For instance, the consensus earnings per share expectation for 2028, which is currently $9.62, could be 20% too low, the analysts said, adding this reflects a significant multiyear opportunity for improving productivity.

The analysts said their analysis suggests cumulative incremental margins of 65% from 2026 to 2028, with operating margins reaching around 27% in 2028, compared to the current consensus estimate of 25%. They also expect free cash flow to outpace EPS growth during this period.

"We think the positive revision opportunity outlined above should become increasingly clear starting with the analyst meeting on Feb. 26," the analysts said.

UBS has a buy rating and a $184 price target on the company.

Price: 150.15, Change: +0.72, Percent Change: +0.48