3M’s Price Target Cut at RBC Capital

RBC Capital analysts reduced their price target for 3M Company (NYSE:MMM) to $78 from $84 while maintaining an Underperform rating. This update follows the April 1 spinoff of 3M’s healthcare business, Solventum. Following this event, 3M shares gained more than 6% yesterday.

For the first quarter of 2024, 3M's Health Care segment will still be included in the company's financial results. Key adjustments in RBC's model include the removal of Health Care sales and profit from the second quarter of 2024, the assumption of $150-$175 million in annual stranded costs recorded across the segments, and the expectation for Transition Service Agreement (TSA) income and costs to have a net neutral impact overall.

RBC’s new price target suggests a 15% downside from the current stock price, reflecting adjustments for legal liabilities and the impact of the healthcare business spinoff.