Deutsche Bank Upgrades 3M to Buy, Citing New CEO's Positive Impact and Improvement Potential

Deutsche Bank analysts upgraded 3M (NYSE:MMM) to Buy from Hold, raising the price target to $150 from $110, following the company’s reported Q2 earnings results last week.

The upgrade also follows the appointment of Bill Brown as CEO in mid-March, with positive feedback from colleagues and investors regarding his past leadership at L3Harris. After a direct interaction with Brown, the analysts were impressed with his strategic vision and detailed focus areas, identifying significant potential for improvement at 3M, both in organic growth and cost structure.

Brown aims to elevate 3M's adjusted operating margins to the mid-20s, up from the forecasted 21-21.5% for 2024, aligning with best-in-class peers in the MI/EE sectors. This margin expansion, coupled with anticipated multiple expansion as long-term investors are drawn to the company's evolving narrative, is expected to drive continued share price outperformance.

Given the attractive 18% upside to the new $150 price target, the analysts see significant near-term and long-term growth potential for 3M, justifying the upgrade to Buy.