3M MMM shares rallied about 10% on Tuesday after the industrial conglomerate reported better-than-expected second-quarter earnings and raised its full-year profit forecast, citing pricing actions, cost reductions and resilient demand across key industrial businesses.
The company also said it expects price increases to fully offset a larger inflation hit from rising oil prices, offering investors confidence that margins will remain protected despite elevated input costs.
Maplewood, Minnesota-based 3M reported adjusted earnings of $2.40 per share for the second quarter, comfortably ahead of analysts’ expectations of $2.25, according to LSEG data.
Revenue rose 2.4% year over year to $6.5 billion, exceeding Wall Street estimates of $6.4 billion.
The company’s largest division, Safety and Industrial, posted more than 8% sales growth from a year earlier, supported by healthy demand for electrical products, adhesives, abrasives and industrial specialities.
Roofing granules also returned to growth during the quarter.
The Transportation and Electronics segment recorded nearly 6% sales growth as strength in semiconductor and data center markets offset continued weakness in automotive demand.
Pricing offsets inflation pressures
3M raised its full-year adjusted earnings guidance to between $8.80 and $8.95 per share, up from its previous forecast of $8.50 to $8.70.
The company said higher prices are expected to fully offset the impact of oil-driven inflation, which it now estimates will reduce annual profit by between $150 million and $175 million.
That compares with its earlier projection of a $125 million cost impact.
Manufacturers have been facing renewed cost pressures after oil prices climbed to their highest levels in more than a month amid escalating US-Iran tensions and concerns about disruptions to energy supplies through the Strait of Hormuz.
Chief Executive William Brown’s strategy of cutting costs, introducing new products, improving customer service and implementing price increases has helped cushion margins despite persistent inflation and uneven demand across parts of the industrial economy.
Analysts remain constructive
Ahead of the earnings release, JPMorgan raised its December 2026 price target on 3M to $180 from $178, arguing the company is entering a phase where revenue growth should increasingly support earnings expansion.
The stock is currently trading at $175.
Analyst Chigusa Katoku said improving growth momentum, supported by stronger short-cycle industrial indicators and expanding AI and data center demand, should drive the next leg of earnings growth.
The bank expects strong order trends, a growing backlog and improving demand across all three business segments to support accelerating growth during the second half of 2026.
Bernstein SocGen Group also lifted its price target ahead of the earnings announcement, increasing it to $140 from $131 while maintaining an Underperform rating.
However, the stock has already crossed the target.
The brokerage cited improving growth prospects tied to data center revenue and a broader recovery in short-cycle industrial markets, although the shares are already trading well above its revised target.
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