Citi Raises 3M (MMM.US) Price Target to $188; New Businesses Such as Data Centers Support Long-Term Growth

Citi Raises 3M (MMM.US) Price Target to $188; New Businesses Such as Data Centers Support Long-Term Growth Citi, in its latest research report, raised its price target on 3M (MMM.US) from $183 to $188 while maintaining a "Neutral" rating. Based on the October 20 closing price of $171.37, this implies a share price return of approximately 9.7%, which, combined with an expected dividend yield of 1.8%, translates to an expected total return of approximately 11.5%. Citi believes that 3M's third-quarter results and management's confidence in the preliminary 2027 targets reinforce the judgment that the company's commercial execution and internal self-improvement initiatives continue to make progress, which is expected to support durable earnings per share growth. Orders and Backlog Support Guidance; 2027 Framework Has Visibility Citi notes that although 3M's end-market demand trends may remain mixed into 2027, strong order activity and a growing backlog provide visibility for 2026 guidance and position the company favorably to achieve its 2027 financial framework. 3M is pivoting toward and expanding into relatively high-growth verticals, including data centers, semiconductors, and space, which could further accelerate the company's growth potential. Consumer and Electronics Demand Soft; Cost Inflation Remains a Headwind Citi also cautions that weak demand in consumer and consumer electronics markets may modestly dampen 3M's growth prospects in the near term. Cost inflation remains a headwind and a variable that requires continued attention. However, Citi believes 3M has adopted a strategic and proactive approach to pricing, including enhancing pricing power through new product launches and improved delivery rates; these initiatives, combined with other productivity and cost actions, should support margin expansion. Incremental Margins Expected to Reach Approximately 40%; Free Cash Flow Healthy Citi believes 3M still has multiple levers, including productivity and cost actions, plant consolidation, and volume leverage, which are expected to enable the company to achieve incremental margins of approximately 40%, at the high end of the company's 30% to 40% guidance range. Meanwhile, 2026 free cash flow guidance is approximately $4.8 billion, and healthy cash flow generation should continue to support disciplined capital deployment, including share repurchases and strategic investments, which Citi believes further strengthens earnings per share growth.