Al Root

3M met with analysts and investors on Wednesday to talk about its business. Shares were down in early trading after the company reiterated its 2025 financial goals.

Investors don't like to see red numbers, but the reaction isn't really bad news. It shows expectations are rising for a company that has had a difficult few years.

For 2025, management still expects sales to grow 2% to 3% and earnings per share to land between $7.60 and $7.90 -- the same as the guidance provided in January.

The company did introduce some medium-term financial targets. Sales growth should "outperform the macro," or grow faster than the overall economy. Operating profit margins should rise 1 percentage point a year, and earnings-per-share growth should approach 10% annually.

That isn't bad for 3M. In the five years before the 2024 spinoff of its Solventum healthcare division, sales fell about 1% a year on average, and operating profit margins contracted by about 3 percentage points. What's more, earnings per share in 2018 amounted to about $8.30. In 2023, earnings per share fell to about $7.75.

"3M is an iconic company with an unmatched spirit of innovation," said CEO William Brown in a news release. He took over for Mike Roman in 2024. "I am confident that our new performance-based culture and 3M eXcellence operating system allow us to capitalize on opportunities to deliver value for customers and shareholders."

The outlook is brighter. Still, 3M stock was down early but clawed back to flat in early trading at $146.53, while the S&P 500 and Dow Jones Industrial Average were up about 0.6% and 0.3%, respectively.

The initial dip reflects some higher expectations for investors. Higher expectations aren't necessarily a bad thing. They show that investors are buying into the turnaround.

A buy-in is reflected in the stock, too. Through early trading Wednesday, 3M stock was up 14% year to date and about 90% over the past 12 months.

"Certainly no fireworks, but a balanced financial plan that will likely place a firm emphasis on growth acceleration," wrote Wolfe Research analyst Nigel Coe in a Wednesday report. He is attending the analyst event.

"We had the opportunity to chat with a number of 3M-ers last night, and each mentioned the same theme: there is more focus on new product innovation and customers under the leadership of Bill Brown," added Coe. "This narrative could be the single biggest takeaway from this event."

He rates 3M stock at Buy with a $170 price target.

Overall, about 55% of analysts covering the stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for 3M stock is about $160.

That price target works out to about 21 times 2025 guidance.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 26, 2025 11:12 ET (16:12 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.