What happened

Shares of 3M (NYSE:MMM) have held up better than most large manufacturers in recent weeks, likely due to the company's business making the N95 face masks that are in demand amid the spread of the COVID-19 coronavirus. But shares traded down nearly 5% on Tuesday, outpacing the market's decline, on investor concerns that the masks might not be enough to shield the company's broader portfolio from a virus impact.

So what

3M's safety products division, and its N95 masks in particular, have gotten a lot of attention in recent weeks as the coronavirus has spread to the U.S. and other regions and concerns about a more widespread outbreak have grown. The newly formed White House Coronavirus Task Force has pledged to procure upward of 35 million masks per month from 3M and other manufacturers.

A traveler on an airplane wearing a mask.

Image source: Getty Images.

That should be good for 3M's bottom line. In October 2009, the company reported better-than-expected earnings due to a run on demand for face masks as the H1N1 swine flu spread. That's likely why shares of 3M held up better than the broader S&P 500 during the late February coronavirus-inspired sell-off.

But as the coronavirus threat has continued to expand, concerns about 3M have grown with it. While increased mask demand should be good for the bottom line, the company's entire safety division is just 20% of total sales, and respiratory masks are just a small fraction of that total business. Meanwhile, 3M also has large exposure to the automotive and industrial sectors, which are likely to be down due to the coronavirus, potentially offsetting any gains from the masks.

MMM Chart

MMM vs. S&P 500 data by YCharts.

Now what

Overall, it is hard to get too excited about 3M just because it is a maker of safety masks. The company is in a period of transition after doing its largest-ever acquisition in 2019, and investors have largely stayed on the sidelines while 3M reinvents itself.

3M is trying to move away from cyclical industrial and transportation businesses and become more of a healthcare stock, but that is a shift that is going to take time. No reason to jump in now just because the coronavirus might mean more mask sales in the weeks to come.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.