The current quarter is looking better than expected at 3M (MMM 0.66%). The revised guidance has investors feeling good about the company, sending shares up 5% on Thursday.
Earnings tick up on spin-off related benefits
It has been a rough time for 3M shareholders. The stock has lost nearly half of its value over the past five years due to concerns about litigation against the company, sluggish markets, and talk of corporate bloat.
But 3M hopes to get a fresh start in 2024. The company recently named a new CEO and is in the process of spinning out its healthcare division.
On Friday, outgoing CEO Michael Roman told a Wall Street investor conference that revenue for the current quarter is coming in "on track" with the $7.6 billion guidance, and earnings are likely to be slightly ahead of expectations. Roman raised the company's guidance to $2.05 to $2.20 per share, from $2 to $2.15 per share.
The added $0.05 was attributed to a debt raise completed by the healthcare spin-off, which is to be named Solventum.
Key Data Points
Is 3M a buy?
The raised guidance is nice, but it would be better if it was based on improving operations and not a one-time event. 3M is slowly starting to build momentum around its turnaround, but investor patience will be required.
The litigation that has haunted this company for years will not go away overnight, and new CEO William Brown is going to need time to put his stamp on the company. Investors have reason to hope that the long drift downward is finally over, but it is going to take a lot of work to push the stock back to its previous highs.
