Citigroup Keeps Buy on 3M

Analyst Jeffrey Sprague still likes the technology company's fundamentals, despite an earnings warning

Citigroup keeps its buy rating on 3M (MMM ).

Analyst Jeffrey Sprague says the 97 cents second-quarter EPS beat his 95 cents estimate and the 96 cents consensus. He says the 9.4% second-quarter revenue growth is below his 10.4% growth estimate, which reflects weaker pricing and less foreign exchange. He believes the guidance may be viewed as a disappointment.

Sprague notes the company guided third-quarter EPS to 97 cents, vs. the 98 cents consensus, and raised the 2004 EPS to $3.72 to $3.75, but he says the consensus was already at $3.75. He says earnings performance isn't as balanced as he had hoped. However, based on earnings, and return-on-invested-capital metrics, he has a $95 target.