3M Tops Earnings Estimates, Full-Year 2022 Outlook Deferred to Feb

3M shares rose nearly 1% in pre-market trading on Tuesday after the maker of N95 masks reported better-than-expected earnings and revenue in the fourth quarter, largely driven by demand for its personal safety and home improvement products.

The Minnesota-based company said its sales for the fourth quarter ended Dec. 31 came in at $8.6 billion, up 0.3% year-on-year; organic local-currency sales increased 1.3% year-on-year. That beat the market expectations of $8.55 billion.

The company’s net income declined to $1.34 billion, or $2.31 per share during the quarter, down from $1.41 billion, or $2.41 per share, a year earlier. But that was above the Wall Street consensus estimates of $2.07 per share.

The maker of N95 masks said it will host a virtual strategic update and 2022 outlook meeting on Monday, Feb. 14, 2022.

3M stock rose nearly 1% higher at $174.28 on Tuesday. The stock slumped nearly 3% so far this year after surging nearly 2% in 2021.

Analyst Comments

“The lack of guidance will be the focal point today, but 4Q itself appeared to demonstrate a few things: 1) Management appears to be getting on top of price/cost, which we expect to see across many price/cost impacted names in 2021 as pricing ramped through year-end. 2) While revenues were in-line with our estimate (cons was too high on intracompany mask adjustments in corporate), they were below consensus and included positive commentary on December suggesting underlying trends were modest otherwise. We’re less willing to extrapolate a trend off December given the potential for abnormal positive seasonality due to fewer December shutdowns than usual (according to FAST, which is hardly a global proxy but one of few data points thus far). 3) The margin beat appears to include slightly lower than expected restructuring spend in 4Q at ~$15M vs. $25-$50M guide. 4) The significant auto outperformance vs. builds in 3Q appeared to normalize in 4Q.s,” noted Joshua Pokrzywinski, equity analyst at Morgan Stanley.

3M Stock Price Forecast

Eleven analysts who offered stock ratings for 3M in the last three months forecast the average price in 12 months of $181.36 with a high forecast of $200.00 and a low forecast of $155.00.

The average price target represents a 4.63% change from the last price of $173.33. From those 11 analysts, none rated “Buy”, eight rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $185 with a high of $226 under a bull scenario and $152 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the company’s stock.

Several other analysts have also updated their stock outlook. RBC cut the target price to $155 from $166. JPMorgan lowered the target price to $200 from $205. Deutsche Bank raised the target price to $192 from $182. UBS lifted the target price to $168 from $167.

Technical analysis also suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator showing a selling opportunity.

Check out FX Empire’s earnings calendar

Monstrous Earnings Ahead: IBM, Microsoft, Intel, Tesla, Apple, Visa in Focus, Along With The Fed

Investors will focus on Q4 earnings for stocks that are economically sensitive, which should show better profits than technology stocks. Increasing Treasury yields and risk aversion could also hit the stock market hard next week, making the big tech earnings that much more critical. In addition, investors will closely monitor the latest news on the rapidly spread Omicron coronavirus variant in order to see how it impacts earnings in 2022. The following is a list of earnings slated for release January 24-28, along with a few previews.

Earnings Calendar For The Week Of January 24

Monday (January 24)

IN THE SPOTLIGHT: IBM

The Armonk, New York-based technology company, International Business Machines, is expected to report its fourth-quarter earnings of $3.39 per share, which represents year-over-year growth of over 60% from $2.07 per share seen in the same period a year ago.

The world’s largest computer firm’s revenue would decline over 21% to $1.96 billion from $20.37 billion a year earlier. It is worth noting that the technology company has beaten earnings in most of the quarters in the last two years, at least.

International Business Machines (IBM) 4Q earnings will be focused on standalone model mechanics and whether Software revenue can re-accelerate while Consulting demand sustains. However, we believe the setup becomes more attractive in 2H21. We update our estimates to reflect IBM standalone post-KD spin,” noted Katy Huberty, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 24

TICKER COMPANY EPS FORECAST
BRO Brown & Brown $0.38
BOH Bank of Hawaii $1.39
BMRC Bank of Marin Bancorp $0.57
CR Crane $1.12
HAL Halliburton $0.34
HMST HomeStreet $1.3
IBM International Business Machines $3.39
PETS PetMed Express $0.3
SMBK SmartFinancial $0.48
STLD Steel Dynamics $5.66
TRST Trustco Bank $0.74
ZION Zions Bancorp $1.33

 

Tuesday (January 25)

IN THE SPOTLIGHT: MICROSOFT

The Redmond, Washington-based global technology giant, Microsoft, is expected to post its fiscal second-quarter earnings of $2.28 per share, which represents year-over-year growth of over 12% from $2.03 per share seen in the same period a year ago.

The world’s largest software maker would post revenue growth of nearly 17% to around $50.3 billion. It is worth noting that with a track record of always beating earnings per share estimates in the last five years, Microsoft is one of the best FAANG stocks in terms of earnings surprises.

“We model Azure growth of 45% cc & see 2-3% of upside, translating to steady growth vs. 48% last qtr. We see potential for strong M365 demand ahead of price hikes, as well as continued execution from LNKD, PowerApps & Dynamics ERP. Although tougher PC/Server dynamics, we expect strengthening trends for C22. Expect Mar Q guide slightly above Street,” noted Derrick Wood, equity analyst at Cowen.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 25

TICKER COMPANY EPS FORECAST
MMM 3M $2.07
AGYS Agilysys $0.13
AXP American Express $1.75
ADM Archer Daniels Midland $1.19
BXP Boston Properties $1.51
CNI Canadian National Railway $1.25
COF Capital One Financial $5.15
FFIV F5 $1.97
GE General Electric $0.84
JNJ Johnson & Johnson $2.12
LMT Lockheed Martin $8.04
LOGI Logitech International $1.23
NAVI Navient $0.81
NEE NextEra Energy $0.41
VZ Verizon Communications $1.28
WSBC WesBanco $0.67

 

Wednesday (January 26)

IN THE SPOTLIGHT: FOMC MEETING CONCLUDES, INTEL, TESLA

Tuesday and Wednesday will mark the first meeting of the Fed’s policymaking arm in 2022. At around 7:30 pm GMT on Wednesday, Jerome Powell will conduct a press conference. This is expected to be the biggest market event since investors expect more details about the central bank’s plan to raise interest rates.

INTEL: The California-based multinational corporation and technology company is expected to report its fourth-quarter earnings of $0.9 per share, which represents a year-over-year decline of about 40% from $1.52 per share seen in the same period a year ago. The company’s revenue would fall nearly 8% to $18.39 billion.

Intel remains controversial. Long-term skepticism remains and share losses will continue until products ramp on the Intel 4 node (old 7nm), but with a new CFO, improving PC and server market outlooks, cash inflows from the US Govt, Mobileye on the horizon, and a February analyst day now reconfirmed, we are cautiously optimistic sentiment can continue to gradually improve. Still LOTS to prove,” noted Matthew D. Ramsay, equity analyst at Cowen.

TESLA: The California-based electric vehicle and clean energy company is expected to report its fourth-quarter earnings of $2.31 per share, which represents year-over-year growth of 180% from $0.80 per share seen in the same period a year ago.

“Q4 results on 26 Jan are critical to validate (or not) the Q3 profit dynamics that could see Tesla 1) carve out meaningful share from legacy OEMs busy protecting their own share by ramping up BEVs and 2) claim a disproportionate share of the industry profit pool. We raise 2021-23 EBIT and FCF 10%, mostly on higher volume,” noted Philippe Houchois, equity analyst at Jefferies.

The high-performance electric vehicle manufacturer would post revenue growth of over 50% to $16.65 billion. The electric vehicle producer has beaten earnings estimates only twice in the last four quarters.

Tesla 4Q deliveries were 20% above our forecast, annualizing to over 1.2mm units, which is already above our prior FY22 forecast. We raise our forecasts and target to $1,300 on this ‘opening act’ and look for more in FY22,” noted Adam Jonas, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 26

TICKER COMPANY EPS FORECAST
ABT Abbott Laboratories $1.16
ANTM Anthem $5.11
AZPN Aspen Technology $1.41
T AT&T $0.76
KMB Kimberly-Clark $1.29
LRCX Lam Research $8.46
RJF Raymond James Financial $1.77
STX Seagate Technology $2.21
NOW ServiceNow $0.22
SIMO Silicon Motion Technology $1.56
SLG SL Green Realty $1.56
URI United Rentals $6.97
VRTX Vertex Pharmaceuticals $2.92
WHR Whirlpool $5.84

 

Thursday (January 27)

IN THE SPOTLIGHT: APPLE, VISA

APPLE: The consumer electronics giant would post its fiscal first-quarter earnings of $1.88 per share, which represents year-over-year growth of nearly 12% from $1.68 per share seen in the same period a year ago.

The iPhone manufacturer would post revenue growth of 6% to $118.13 billion. It is worth noting that with a track record of always beating earnings per share estimates in the recent five years, Apple is the best FAANG stock in terms of earnings surprises.

Apple is expected to report 1QFY22 earnings after market on Thursday, January 27th and host a call with investors at 5:00 PM ET. In our view, the recent strength in shares is a reflection of investors’ willingness to reward Apple for entering new markets, including electronic vehicles (EV) and the metaverse (with an augmented reality/virtual reality product). Now, we look for comments from management on its future product roadmap to justify the increase in share price,” noted Tom Forte, Senior Research Analyst at D.A. DAVIDSON.

“We are reiterating our BUY rating for Apple (AAPL) and putting our price target of $175 under review ahead of the company reporting 1QFY22 earnings.”

VISA: The world’s largest card payment company is expected to report its fiscal firth-quarter earnings of $1.70 per share, which represents a year-over-year decline of about 20% from $1.42 per share seen in the same period a year ago.

The global technology payment company would post revenue growth of nearly 19% to $6.8 billion. It is worth noting that the company has beaten earnings in most of the quarters in the last two years, at least.

Visa (V) is one of our preferred stocks, as it is a key beneficiary of resilient global consumer spend growth, the ongoing shift from cash to electronic payments, and broadening merchant acceptance. Global Personal Consumption Expenditure and secular growth drivers should support low double-digit revenue growth in the near-to-medium term,” noted James Faucette, equity analyst at Morgan Stanley.

“While Covid-19 headwinds are likely to persist, we see upside opportunity from the faster-than-expected recovery of travel. Continued investment in longer-term initiatives (faster payments, P2P, B2B) and partnerships continue to increase its TAM and offer an opportunity for compounding double-digit earnings growth for the foreseeable future.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE JANUARY 27

TICKER COMPANY EPS FORECAST
AOS A.O. Smith $0.77
ALK Alaska Air Group $0.21
BX Blackstone $1.3
CNX CNX Resources $0.5
CMCSA Comcast $0.73
DOW Dow $2.16
EMN Eastman Chemical $1.88
HCA HCA Healthcare $4.57
IP International Paper $1.02
JBLU JetBlue Airways $-0.39
MA Mastercard $2.2
MCD McDonald’s $2.32
LUV Southwest Airlines $-0.39
X U.S. Steel $5.12
V Visa $1.7

 

Friday (January 28)

TICKER COMPANY EPS FORECAST
ALV Autoliv $1.18
BAH Booz Allen Hamilton $0.97
CAT Caterpillar $2.23
CHD Church & Dwight $0.59
CL Colgate-Palmolive $0.79
RDY Dr. Reddy’s Laboratories $0.64
GNTX Gentex $0.33

 

Situation on Major US Stocks

Apple climbs higher after another symmetric triangle pattern.

Amazon breaks the horizontal resistance and aims north.

Berkshire Hathaway goes down after the false breakout above the crucial horizontal resistance.

eBay is on the lower line of the channel up formation.

Goldman Sachs is more or less in the same situation but bounces with a promising hammer.

3M breaks the lower line of the wedge and aims south.

Netflix, with an evening star pattern and a false breakout above an important horizontal resistance.

Walmart, Covestro, Airbus and Westfield inside of symmetric triangle patterns. Here, a breakout should happen soon and will show us a direction to follow in the next few weeks or months.

Marketmind: Trillion-Dollar Tesla

LONDON (Reuters) – A look at the day ahead from Sujata Rao

The news was less cheerful from Facebook which is contending with whistleblowers and falling popularity among the young. But a $50 billion buyback plan, unveiled after market close, may be enough to lift the shares on Tuesday, especially if fellow tech titans Google, Microsoft and Twitter also post upbeat figures.

All in all, the global equity index is inching back towards the record highs hit early-September. U.S. stock futures pointing north for Tuesday and Japanese markets added 1.8%. In Europe, a surprise 9% profit boost at UBS — its highest in six years — could see the pan-European banking index rally further past April 2019 highs.

But the supply-chain snarl-ups, container traffic jams and chip shortages bedevilling companies worldwide show no signs of going away any time soon.

Just take carmaker Hyundai, which missed profit estimates and predicted that the chip shortages hampering output would take a long time to fix. And French car parts maker Faurecia saw Q3 sales drop 10% as semiconductor shortages forced its customers to cut production.

Then there is the prospect of central bank policy tightening, with the Bank of England looking set to join rate-hike club next month.

It all adds up to slower economic growth and earnings, Citi reckons. That could see buy-side analysts switching to net “downgrade” mode on stock recommendations for the first time since the pandemic first hit, it added.

And don’t forget China, where another developer Modern Land missed paying a bond due on Monday. Shanghai and Hong Kong shares fell, despite gains for EV firms.

Key developments that should provide more direction to markets on Tuesday:

-Philadelphia Fed Nonmanufacturing Business Outlook Survey

-U.S. monthly home prices Aug/consumer confidence Oct/new home sales Sept

-U.S. 2-year note auction

-Europe earnings: Norsk Hydro posts record Q3; Reckitt Benckiser ups full-year f’cast after upbeat Q3; Logitech sales rise on work-from-home boom

– -U.S. earnings: 3M, Corning, Eli Lilly, General Electric, Hasbro, Invesco, JetBlue, Lockheed Martin, S&P Global, United Parcel Service, Xerox, Google, Microsoft, Texas Instruments, Twitter, Visa

(For graphic on Tesla – https://fingfx.thomsonreuters.com/gfx/mkt/jnvwewzegvw/Pasted%20image%201635194081739.png)

(Reporting by Sujata Rao; editing by Karin Strohecker)

The Hottest Stocks On The Market Right Now

Stocks are back at all-time highs so the party goes on!

AMD bounces off the 38,2%  Fibonacci and aims higher again.

Autodesk climbs up after a short break inside of the flag.

Activision Blizzard is still below crucial horizontal resistance.

Equinix escapes from the symmetric triangle to the upside.

3M does the same but to the downside.

Same with British American Tobacco.

T-Mobile patiently waits for the buy signal inside of the wedge pattern.

Same for Royal Dutch Shell, but in this case, we’re in the triangle/rectangle.

Rolls-Royce climbs higher after the breakout of the crucial horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

3M Under Pressure After Downgrade

3M Company (MMM) is trading lower on Tuesday after Credit Suisse downgraded the Dow component to ‘Neutral’. The downtick ended a weeklong advance that reached within 9 points of May’s 2-year high at 208.95 while triggering a failure at the 50-day moving average, which was remounted last week. More importantly, the turnaround is taking place at the lower edge of an unfilled April 2019 gap between 199 and 220, keeping the long-term downtrend intact.

Respirators and Post-It Notes

The conglomerate makes many of the respirators and N95 masks used by hospital staff and patients during the COVID-19 pandemic. The sales spike underpinned 2020 revenue but comprised just a small portion of the $115.9 billion market cap, yielding a zero annual return for frustrated shareholders. However, their participation in the crisis made headlines, introducing a new supply of investors who knew nothing about 3M products beyond Post-It Notes and Scotch-Brite Dobie Pads.

Credit Suisse analyst John Walsh pulled no punches about ongoing litigation, noting “we do not expect to see significant multiple expansion given: 1) where we are in the cycle, 2) the difficulty in quantifying PFAS <legal exposure>, and 3) the CS/investor debate around the Combat Arms earplug lawsuits. Said another way, despite fundamental potential upside from a cyclical upturn in global IP, and potential inventory restocking, we think it will be difficult for 3M to regain its premium multiple.”

Wall Street and Technical Outlook

Wall Street consensus is stuck like glue to a ‘Hold’ rating, based upon 3 ‘Buy’, 1 ‘Overweight’, 14 ‘Hold’, 1 ‘Underweight’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $181 to a Street-high $237 while the stock is trading more than $3 below the median $200 target 25-minutes after the opening bell. This mid-range placement suggests that 3M is fairly-valued and unlikely to reward bulls or bears in coming months.

3M posted a two-year high at 259.77 in January 2018 and turned sharply lower, carving a series of lower highs and lower lows into March 2020’s 7-year low at 114.04. It bounced in a slow-motion uptick, finally reaching the January 2020 swing high at the start of 2021. The stock added more than 25 points into May and reversed into a range that’s crisscrossing the .786 Fibonacci retracement of the 2019 – 2020 selling wave and .618 retracement of the three-year downtrend. These harmonic barriers are likely to limit progress into 2022.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

3M Shares Slump as it Keeps Full-Year Guidance Unchanged

3M Company shares slumped about 4% on Tuesday after the maker of N95 masks kept its full-year 2021 guidance unchanged despite beating earnings estimates for the first quarter.

The U.S. technology company said net sales grew about 10% to $8.9 billion, beating the market expectations of $8.47 billion. Both first-quarter GAAP and adjusted earnings were $2.77 per share, resulting in year-on-year increases of 23% and 27% on a GAAP and adjusted-basis, respectively. That was higher than Wall Street’s consensus estimates of $2.25 per share.

3M’s full-year 2021 guidance remains unchanged with earnings expected to be in the range of $9.20 to $9.70 per share. The company expects its full-year total sales growth in the range of 5 to 8% with organic local-currency growth between 3 to 6%.

Following this, 3M shares slumped over 3.6% to $192.43 on Tuesday.

Analyst Comments

“The trend of significant beats and modest raises or limited updates to full-year guidance has been more prominent this quarter but with consensus near the high end as management reiterates following a significant beat, the line between conservatism and caution could be a bit blurrier. Price/cost was negative in the quarter and commentary appears to imply that trend continues, which is a rarity for 3M,” noted Joshua Pokrzywinski, equity analyst at Morgan Stanley.

“Outside of Health Care, some of the biggest Y/Y drivers of improvement were in businesses with less visibility: Personal Safety, Electronics, Automotive, and Home Improvement. Strength in HC and other “general industrial” verticals should be sustainable though.”

3M Stock Price Forecast

Eight analysts who offered stock ratings for 3M in the last three months forecast the average price in 12 months of $192.88 with a high forecast of $202.00 and a low forecast of $175.00.

The average price target represents a -0.59% decrease from the last price of $194.02. Of those eight analysts, two rated “Buy”, four rated “Hold” while two rated “Sell”, according to Tipranks.

Morgan Stanley raised the base target price of $200 from $258 with a high of $232 under a bull scenario and $161 under the worst-case scenario. The firm gave an “Equal-weight” rating on the technology company’s stock.

Several other analysts have also updated their stock outlook. Zacks Investment Research upgraded shares of 3M from a “hold” rating to a “buy” rating and set a $196 price target. Citigroup lifted their price objective to $188 from $185. Barclays lifted their price objective to $180 from $163 and gave the company an “underweight” rating.

Upside and Downside Risks

Risks to Upside: A resolution of the PFAS issue would drive a positive reaction in the stock and multiple re-rating. Accelerating end-market demand driving growth well in excess of GDP – highlighted by Morgan Stanley.

Risks to Downside: A majority of 3M’s businesses are levered to general industrial short cycle momentum. A broader industrial slowdown could disproportionately impact 3M’s ability to hit its LT targets.

Check out FX Empire’s earnings calendar