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3M Stock Price: Limited Upside Is Ahead

3M (NYSE: MMM) stock price has been showing volatility over the past couple of months after experiencing a sharp sell-off early this year. 3M shares had recently hit three years low of $150. Although the share price recovered slightly, analysts see limited upside potential in the coming days. This is because of the economic downtrend and sluggish revenue growth.

The 3M stock price is currently trading around $175. Analyst’s sentiments are negatively impacted by lower guidance for the full year along with a single-digit year over year decline in revenues. The huge share price selloff has made its valuations attractive for long-term investors. The stock is trading around 19 times to earnings at present.

MMM 3M Company daily Stock Chart

Messy Q3 Performance Negatively Impacted Sentiments

The company has reported third-quarter revenue of $7.99 billion, down 2% year over year. The revenue missed analyst’s expectations by a wide margin of $210 million.

Besides consumer and healthcare segments, it’s all other business segments generated lower than expected revenue in Q3. Its safety and industrial sales plunged 5.7% to $2.8B, while transportation and electronics sales declined 4.4% to $2.5B.

On the positive side, the company has highlighted strong operational efficiencies during the third quarter. Its earnings per share also received support from share buybacks. The earnings per share grew 5% despite a 2% decline in revenues.

The company says, “Moving ahead we’ll continue to focus on driving operational improvements and investing for the future, which will position us for strong growth and premium returns as our markets recover.”

Lower Outlook Could Dent 3M’s Stock Price Performance

The company has declined its full-year outlook following third-quarter results. The company expects fourth-quarter earnings to stand around $2.05-$2.15 compared to the analysts’ consensus for $2.37 per share.

It has also lowered full-year earnings outlook to $8.99-$9.09, down from previous guidance of $9.25-$9.75. It also anticipated negative organic revenue growth for the full year. Overall, the 3M stock price has limited upside potential in the short-term. However, it could be a good entry point for long-term investors.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.