3M to Hit $175 by Mid-Year, and Higher Highs Are Likely

Key Points

• 3M's stock price is in rally mode and heading to the $180 level or higher by mid-year 2025.
• The company's legal issues are fading in the rearview mirror, and the road to growth is more straightforward.
• Capital returns, analysts, and institutional trends align, providing a strong tailwind for this market. 

The market for 3M NYSE: MMM stock is on fire, with shares rising by 7% in the final week of February and 65% in the preceding 12 months, and there is more upside ahead. The strong technical indicators point to a move to $175, possibly higher by midyear. The reason is simple: this once-Dividend King is back in action with its legal troubles behind it and business growth in the forecast. 

The business highlights from 2024 include a rapidly improving balance sheet and capital return outlook, including investor-attracting distribution increases and share-count-reducing buybacks. The takeaway is that market fears have been alleviated, and the premium this stock deserves is getting priced in and may result in a new all-time high for this industrial stock by year’s end. 

3M Benefits From a Bullish Analyst Sentiment Shift

The analysts' sentiment trends reflect a significant change in market attitude. The trends include a 60% increase in coverage to 16 analysts since the low in April 2024, firming sentiment with consensus up from Hold with a bearish bias to Moderate Buy with a bullish bias, and a rising price target. The Moderate Buy rating has a bullish bias because 67% rate the stock at Buy or higher with no end to the upgrade cycle in sight.

The price target is significant because it assumes fair value at the March open after rising 40% in 12 months, and a move into the high-end range is likely. That puts this market at a nearly decade high and on track to retest the all-time high soon after. 

The insiders are selling 3M shares, but this isn’t a problem. They benefit from share-based compensation and have been stalwart holders. They only sold into the rally after the stock price reclaimed multiyear high price points, and institutional activity offsets this.

The institutional activity is noteworthy because the group sold on balance in Q2 and Q3 of 2024, then reverted to buying in Q4 and ramped their buying activity to a six-quarter high in Q1 2025, aligning with the shift in analysts' sentiment. They own about 65% of the stock and provide a strong tailwind for the market. 

The capital return is solid and improving in both quality and size, a driving force for sell-side investors. The company’s combined dividend distribution and share repurchases amounted to $3.8 billion in F2024, about 77% of the free cash flow, and the guidance for 2025 is better.

The company is guiding for $5.25 billion in FCF at the mid-point, putting the capital return, if left unchanged in 2025, at 71%. The dividend is attractive, with a 1.85% and positive outlook for annual distribution growth; the share repurchase is also appealing, ramping at year’s end to reduce the count by 1.6% compared to Q4 2023 and expected to remain strong in 2025. 

3M Reverts to Growth in Q4 2024

3M’s Q4 results and guidance for 2025 were not robust and included the impact of its divestiture in 2024 but showed the company turning a corner. Highlights include a return to growth in ongoing operations driven by organic gains and an expectation for increased traction in 2025. The forecast is for roughly 1% growth in ongoing business and improved margins and cash flow as the impact of legal settlements dwindles in the rearview mirror. In the long term, 3M is forecasted to sustain mid-single-digit top and bottom-line growth through 2030 with modest acceleration. 

The technical action in MMM stock is very bullish, showing a Bullish Triangle on the weekly chart and a Bullish Flag Pattern on the monthly. These patterns suggest a move to $180 is likely, and a higher is probable because of the business, analysts, and institutional trends. The questions are if the 3M market will enter a consolidation once it reaches $180 and how long it will last, or if the rally will continue on the all-time high quickly.