3M Company’s (MMM) stock touched a 23% high when the end bell sounded on Friday 26 July 2024. Analysts indicated that this is the conglomerate’s largest gain in over 40 years and attributed the uptrend to 3M’s new CEO, Bill Brown, who took the wheel on 1 May 2024.
3M’s New CEO Behind 40-Year Stock High
Based on Bloomberg data, Brown used his first earnings report to identify gaps and set future priorities. One of these goals aims to accelerate new developments to resuscitate the company’s portfolio. During 3M’s earnings call, he commented:
There’s a lot of value that can be created from the raw materials that we have here. I’m encouraging people to challenge the way we’ve done things in the past every single day.
Shareholders reportedly welcomed this message as the company’s market value dropped by more than $60bn under the previous CEO, Mike Roman, because of stale sales, liabilities and the ever-increasing price of raw materials.
The positive market response came after 3M raised its low-end adjusted profit outlook from $7 to $7.30 a share. Q2 adjusted earnings came in at $1.93 per share, while the $6.26bn net sales outstripped Wall Street predictions.
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Economists believe that Brown’s transparent approach to the problems re-bolstered confidence in the company. He acknowledged a decline in revenue from new products and said that while electric vehicles (EVs) and semiconductors present growth opportunities, “these efforts aren’t material enough today to offset erosion in our core”.
Brown said that the company must face the “simple fact” that its “products are aging”. Bloomberg quoted Scott Davis, a Melius Research analyst, who said:
The good news, perhaps, is that Bill has the guts to call all of this out.
According to market movements, it would seem that investors agree.
