Is 3M Stock Going to $126? 1 Wall Street Analyst Thinks So.

A week after raising a price target by $1 to $111, a Barclays analyst did it again, raising 3M's (MMM 0.46%) price target to $126 and slapping an "overweight" (buy) rating on the stock. That implies a 20% jump in the stock price over the next 12 months or so.

The move comes after some relatively positive news recently from 3M, which may have affected the analyst's thinking.

3M is improving

Plenty has gone wrong for 3M in recent years, but the Barclays upgrade sees improvement underway. 3M was hit with a combination of weak end markets (notably in electronics, automotive original equipment manufacturer, materials, and housing), ongoing legal costs and the threat of multi-billion-dollar legal settlements, and weak margin performance. The list goes on.

The bullish case for the stock is based on the idea that many of these things are already baked into the price and are starting to improve. For example, management recently told investors it was "seeing some strength in electronics coming in stronger than expected," and the automotive aftermarket remains strong. There are still areas of weakness, but its end markets don't appear to be improving overall.

Meanwhile, management is confident its restructuring actions will lead to margin expansion. It also cited lower-than-expected stranded costs from the Solventum spinoff due to the restructuring actions. In addition, former L3 Harris Technologies CEO William Brown will take over as the new CEO on May 1, creating hopes that a new strategic approach might be implemented.

Is 3M stock a buy?

The midpoint of management's earnings per share guidance for 2024 ($9.35-$9.75) puts the stock on slightly less than 11 times 2024 earnings, and the stock is indisputably a value candidate.

That said, the sustainability of the current dividend is coming into question, and this is a company with a track record of disappointing investors. There are also question marks around its business model. Cautious investors will want to see the dividend policy and guidance after the Solventum spinoff on April 1.