HomeInvesting NewsUBS upgraded 3M to Neutral based on the company's potential legal liability...

UBS upgraded 3M to Neutral based on the company’s potential legal liability valuation

Published on

3M (NYSE:MMM)

UBS changed its rating on 3M (NYSE:MMM) from Sell to Neutral and claimed that the industrial conglomerate’s legal responsibility is reflected in the share price. In contrast to the average expectation of $2.68, the bank cut its EPS forecast for the third quarter from $2.74 to $2.60.

Investors have made an effort to calculate the potential cost of 3M’s legal liabilities. The business is the subject of thousands of lawsuits alleging that their military-grade earplugs are to blame for hearing loss. The company 3M, widely known for producing Post-It Notes and Scotch tape, may be liable for billions of dollars in legal fees or settlements with soldiers who claim the earplugs caused their hearing to deteriorate when they returned from combat.

Another potential cost is from 3M’s previous production of PFAS, or perfluoroalkyl and polyfluoroalkyl chemicals. In compliance with the federal Superfund law, the Environmental Protection Agency requested this month that two of the chemicals be labeled as dangerous. 3M created PFAS for goods like Scotchguard, a coating to make clothes water-repellent.

According to Chris Snyder, an analyst at UBS, “our math implies the market is now integrating a $40 billion or more liability into the stock valuation.” Conversely, the upside will probably be limited because of the significant, ambiguous, and undetermined litigation overhang.

Market Outlook

Shares of 3M Company have lost 32% so far this year as a result of MMM’s revised FY 2022 management outlook, disappointing investors, and unfavorable events involving claims.

The successful spin-off of the healthcare company and a positive change in investor tastes and styles are the two probable catalysts for MMM.

After weighing the potential catalysts and the company’s unattractiveness as a prospective long-term investment, I continue to maintain a Hold rating for 3M Company. More on 3M stock here.

Featured Image – Megapixl © Zuamir

See Disclaimer Please

Latest News

Recent Surge in Tesla Stock: Exactly What Caused It?

Tesla Stock (NASDAQ:TSLA) As of 11:30 a.m ET on Friday, Tesla stock was up 2.3%...

Here’s Why Carvana Stock Fell Quite So Much as 23.7% This Week

Carvana Stock (NYSE:CVNA) According to data provided by S&P Global Market Intelligence, Carvana stock fell...

Here’s Why Tellurian Stock Is Rising Again Today

Tellurian Stock (NYSEMKT:TELL) Tellurian stock was up 6.5% as of 11:06 p.m. ET today after...

Is It Time to Buy Chewy Stock?

Chewy Stock (NYSE:CHWY) Pet supplies are one of the few consumer goods that do well,...

More like this

2 Casino Stocks You Should Consider

With a recession on the horizon, investors must be more selective than ever. Analysts...

(Exxon Mobil Stock) Exxon Ceo Warns Biden Administration Against Restricting Fuel Exports

Exxon (Exxon Mobil Stock) opposes calls for oil corporations to reduce international exports and...

Apple Stock Loses $120 Billion Because of a Rare Downgrade

Apple stock just took a significant knock after it was once considered to be...

Meta Stock Tops Morningstar List of the Most Undervalued Stocks 

Morningstar compiled a list of the most undervalued stocks among those with a large...

Hd Stock up as Foundation to Contribute Up to $1 Million to Aid Communities Affected by Hurricane Ian

HD stock was trading at $280.23 as of 12:55 PM EDT. The Home Depot Foundation...

Making the Cut: Micron (Micron Stock)

Micron Technology Inc (Micron Stock) latest outlook brings expectations back to normal, although the...