3M is a buy ahead of the industrial giant’s second-quarter release, as demand for artificial intelligence spreads across different sectors of the economy, according to JPMorgan. The bank upgraded the Dow Jones Industrial Average component to overweight from neutral and raised its price target to $180 from $178. That implies 11% upside from Thursday’s close. “We see growth taking hold at 3M, which is required to drive the next leg of EPS growth, with short-cycle indicators continuing to be supportive and AI/datacenter driven demand broadening out into parts of the economy outside of the obvious beneficiaries,” Analyst Chigusa Katoku wrote. 3M is scheduled to release its second-quarter figures on Tuesday. JPMorgan has slightly higher earnings expectations than the rest of the Street at at $2.26 per share versus a consensus of $2.24 per share. MMM YTD line 3M YTD Katoku wrote that the data center and semiconductor-related sales have compensated for weak consumer electronics and auto-related sales. She also wrote that US consumers continue to buy more of 3M’s standard products and can increase their profit margins as inflation falls. “Consumer electronics and auto softness…is offset by strength in datacenter/semi, and 3M’s efforts to gain penetration in mainstream markets [are] taking hold, while [the] US consumer has been resilient.” The analyst wrote. “We see pricing take hold, which we think 3M can hold onto even as inflation comes down.” Analysts are split on the stock. According to LSEG, nine analysts rated the stock a buy or strong buy, while another eight assigned a hold rating. Two even rate it as underperform or sell.
3M reports earnings next week. JPMorgan is bullish ahead of the report
