Citigroup upgraded 3M (MMM) to buy from hold.
Analyst Jeffrey Sprague says the the maker of Scotch brand tape and touch computer screens now sees first-quarter and 2004 results above the prior estimates. This follows a 10% drop in the stock year-to-date, and about 1100 basis points of underperformance vs. the S&P 500.
Sprague thinks 3M has lagged as investors have looked for more cyclical leverage, but thinks this rotation has mostly played out. Also, he thinks as as large-cap stable growth company, 3M will support stronger relative price performance as the economic cycle matures and purely cyclical companies fall from favor.
Sprague raised the $3.50 2004 earnings per share estimate to $3.60, and upped the $3.85 2005 estimate to $4.00 to reflect stronger sales volumes.