Industrial conglomerate 3M (NYSE:MMM) announced that it has halted all PFAS (per and poly-fluoroalkyl substances) manufacturing processes at its Zwijndrecht facility in Belgium. This move is part of 3M’s commitment to discontinue PFAS production and use by the end of 2025.
PFAS, often called “forever chemicals,” are synthetic compounds hazardous to the environment and health. Given the hazards, 3M was told to temporarily stop all production processes at its industrial facility in Zwijndrecht. This came after the serum blood tests revealed increased PFAS levels in over 50% of the roughly 800 people who resided near the 3M facility.
Later, in July 2022, the company reached an agreement with the Flemish Government, as part of which 3M Belgium announced an investment of over €571 million to benefit the people of Flanders and carry out PFAS-related remedial actions. Meanwhile, in June 2023, the company agreed to pay $10.3 billion to settle several lawsuits against it in the U.S. for contaminating drinking water with PFAS.
3M’s annual net sales of manufactured PFAS are about $1.3 billion and carry EBITDA margins of approximately 16%. While the exit from PFAS manufacturing won’t impact 3M’s financials much (as it is a small portion of its total revenue), the ongoing weakness in electronics, consumer retail, and the company’s China business will likely hurt its near-term prospects. Against these challenges, let’s look at what the Street recommends for 3M stock.
Is 3M a Buy, Sell, or Hold?
The weak sales environment keeps analysts sidelined on 3M stock. With 11 Hold and two Sell recommendations, 3M stock has a Hold consensus rating.
MMM stock has consistently underperformed in the broader markets and is down about 17% year-to-date. Given the decline in its value, analysts’ average price target of $116.08 implies 22.46% upside potential from current levels.
