Analyst Note| Joshua Aguilar |
Wide-moat-rated 3M had solid second-quarter results. However, we lower our fair value estimate to $195 per share from $199 previously due entirely to our probability-adjusted U.S corporate tax rate of 26% beginning in 2022. Nonetheless, 3M turned in better-than-expected organic top-line growth, as our earnings and free cash flow projections moved higher, though our overall operating margin assumptions remained untouched. On the heels of this outperformance, management raised its EPS guidance range by 45 cents at the midpoint to $9.90, or good for just shy of a 5% raise. Management also tightened the EPS guide by a dime per share. Finally, management raised its full-year organic top-line guide by 3% to 7.5% at the midpoint.