3M’s October Sales Update Reflects Deceleration; Street Stays Cautious

Industrial giant 3M provided an update on its October sales on Nov. 13, which reflected a slow down compared to the third quarter growth rate.

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The company’s October sales grew 3% year-over-year to $2.9 billion. 3M’s (MMM) sales grew 4.5% in the third quarter, primarily driven by a 25.5% rise in the Health Care segment’s sales. The company’s organic sales growth in October came in at 2%. 3M had previously expected October sales to be flat to up low-single digits. The company has been in the news amid the COVID-19 pandemic for its N95 masks.

Coming to segment-wise performance, October sales for the Health Care, Consumer, and Safety and Industrial segments increased 12%, 7% and 4%, respectively. However, sales from the Transportation and Electronics segment fell 4% last month. On a geographic basis, 3M’s sales rose 3% in Asia Pacific and 2% in EMEA (Europe, Middle East and Africa) as well as in the Americas.

Last month, JPMorgan analyst Stephen Tusa increased the price target on 3M to $170 from $159 and maintained a Hold rating. The analyst has a “balanced view” of the multi-industry sector, based on his preliminary view for 2021. Tusa agrees that given the pandemic downdraft, there is a “floor under” 2020 earnings estimates, “with some near-term upside.”

However, heading into 2021, he feels that the debate shifts to “escape velocity on earnings,” where there is risk given multiples “that discount optimistic growth assumptions.” (See 3M stock analysis on TipRanks)

The Street also has a cautious outlook on 3M, with a Hold analyst consensus that breaks down into 1 Buy, 5 Holds and 1 Sell. The average price target stands at $172.86, reflecting a modest upside potential of 1.8% over the coming year. Shares have declined 3.8% year-to-date.

3M continued paying dividends amid the pandemic and has a dividend yield of 3.46%.