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3M(New York Stock Exchange: mmm) +1.9% In Friday trading, Bank of America upgraded its shares to buy from Neutral with a price target of $120, up from $105, citing new CEO Bill Brown's desire to refocus the company on growth and operations.
Bank of America believes in change In management comes just in time, as 3M (Mmm) has stumbled through lawsuits over PFAS and combat weapons, exiting PFAS manufacturing, and spinning off its health care business, adding that investors were also concerned about the optics of a dividend cut that is now complete.
“As major lawsuit settlements decline and uncertainty about remaining litigation declines, investors will likely focus on improved operations, potential cyclical leverage, and inexpensive valuation even when adjusted for future legal liabilities,” Bank of America's Andrew Aubin wrote.
3M (MMM) has settled two major sets of liabilities over the past 12 months — combat arms and PFAS-related public water suppliers (MDLs) — which Obin estimates represent 40% of the total liabilities, but notes that the settlement value for water suppliers General is widely believed by the legal community to be the top end of the three remaining groups of lawsuits (tort to natural resources, personal injury, and CERCLA).
“This is important because it reduces uncertainty about the total payments,” Aubin said. “Given the litigation timeline, we are unlikely to see additional headlines related to PFAS litigation until mid-2025, which is another positive.”
