Where 3M’s Q3 Report Says the Stock Price Is Heading

Key Points

• 3M's recovery is underway, and its stock price will rise in 2025.
• Operational quality and cash flow drive the market, including the capital return they fuel. 
• Analysts' sentiment is bullish, leading this market higher, but institutions are risky. 

3M’s NYSE: MMM Q3 report says the stock price is heading higher because its business recovery is in full swing. The results reveal that the business has moved past its legacy issues, including those related to forever chemicals, and is on track to sustain profitable growth over time.

Among the critical details is the company’s cash flow, free cash flow, and capacity for capital returns, which is as healthy as ever and improving by the quarter. 

The takeaway is that 3M has numerous tailwinds to support its price action and is likely to reach fresh, long-term highs soon. The critical detail is that a move to new highs will break this market out of a significant trading range, setting this industrial stock up for a sustained uptrend and a new all-time high. 

3M Outperforms in Q3, Raises Guidance: Shares Move Higher

3M had a decent quarter in Q3 with growth in its three remaining business segments driving outperformance. The $6.3 billion adjusted revenue is up 4.1% on a 3.2% organic growth, outperforming MarketBeat’s consensus estimate by $0.050 billion. 

The 64 bps of strength is slim but compounded by margin strength and guidance that expects momentum to continue building in Q4. 

Regarding margins, the company widened its adjusted operating margin by 170 basis points, driving accelerated bottom-line gains. An operating margin of 24.7% resulted in adjusted EPS of $2.19, including the impact of share reduction, sufficient for a 10% increase compared to last year. The more significant factors are cash flow and free cash flow, which are more than adequate to cover the capital return. 

Capital returns are significant to investors. Not only does 3M pay a substantial dividend, yielding an annualized 1.8% in late October, but it also aggressively repurchases shares. The Q3 activity resulted in a 2.6% average reduction, bringing the YTD figure to 2.2%.

This former Dividend King pays only 40% of its current-year outlook, leaving it well poised to raise its payout over time and potentially regain its former status. As it stands, the company has issued a single increase since the distribution cut in early 2024. 

3M Guidance Raise Can Sustain the Analysts Upgrade Cycle

3M’s guidance is good and can sustain the analysts’ sentiment upgrade cycle for at least another quarter. It includes reaffirming revenue targets for the year, improving the outlook for margin expansion, and narrowing the range for adjusted EPS. The adjusted EPS is noteworthy because it reflects increased confidence in a stronger figure, well above the consensus reported by MarketBeat.

The low end of the new guidance range is $7.95, while the consensus reported ahead of the release was $7.93. 

Analysts' sentiment is bullish for 3M stock. There was a notable shift in trends starting in 2024, as litigation issues ended, resulting in numerous upgrades and price target increases over the following 12 months.

The result is that sentiment improved from Hold to Moderate Buy, the bias is bullish, and the price target is increasing. While the consensus assumes the market is fairly valued the day after the Q3 release, the trend points to the high end of the range at $185, a seven-year high. 

The question is whether the institutions will continue to buy this stock. The group was bullish in the first half of 2025, but activity dwindled to nearly nothing in Q3 and reverted to selling in the first weeks of Q4. If that continues, it is unlikely that, with institutions owning 65% of the stock, 3M will be able to set new highs without another catalyst.