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3M Forecasts, Target Updated At Credit Suisse

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In a report published Monday, Credit Suisse analyst Julian Mitchell maintained a Neutral rating on 3M Co. (NYSE: MMM), while lowering the price target from $178 to $169, following a re-evaluation of the company's EV/EBITDA projections and P/E multiples versus relevant peers in the EE/MI segment.

For 2016, the analyst expects the company to post sales growth of 3 percent, with EBIT margin of 24.5 percent, Terminal Growth of 2 percent and WACC of 7 percent. In addition, the EPS estimates 2015, 2016 and 2017 have been lowered from $7.95, $8.90 and $9.60 to $7.88, $8.81 and $9.60, respectively.

According to the Credit Suisse report, "If the company undertakes large acquisitions with its under-levered balance sheet, there could be integration risks associated with these acquisitions, and a risk of subsequent write-downs of intangible assets if the acquisitions' earnings fall short of company expectations."

The analyst also believes that given the cyclicality of the Electronics & Energy business, the consensus estimates, which assume steady growth, "could prove too optimistic." In addition, given that 3M has a higher than sector average share of earnings from overseas, any continued rally of the U.S. dollar against other currencies would lead to a decline in the Street earnings estimates and the guidance.

"The valuation multiple is at elevated levels relative to the company's history; any earnings disappointment could therefore cause a disproportionate drop in the stock price," the Credit Suisse report added.

Latest Ratings for MMM

DateFirmActionFromTo
Dec 2016RBC CapitalUpgradesUnderperformSector Perform
Nov 2016JefferiesMaintainsBuy
Nov 2016Goldman SachsDowngradesNeutralSell

View More Analyst Ratings for MMM
View the Latest Analyst Ratings

Posted-In: Credit SuisseAnalyst Color Price Target Analyst Ratings

 

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