RBC Capital analysts reduced their price target for 3M (NYSE:MMM) to $96 from $100, maintaining an Underperform rating on the stock. While new CEO Bill Brown’s leadership brings hope for a turnaround, the challenges facing the company are expected to persist for years.
Bill Brown, the respected former CEO of L3Harris, took over 3M’s leadership in May 2024, fueling investor optimism for a strategic transformation. However, 3M’s entrenched culture and insular organizational structure may resist the sweeping operational and cultural reforms needed for significant change. Historical attempts by previous outsider CEOs, including Jim McNerney and George Buckley, faced internal pushback that derailed their initiatives, raising concerns about the likelihood of success for Brown’s strategies.
In addition to cultural challenges, 3M faces ongoing risks related to PFAS (per- and polyfluoroalkyl substances) liabilities. These include unresolved legal exposures across five categories: personal injury, wastewater utility, international claims, Superfund sites, and attorneys general cases. The first personal injury trials are set to begin in October 2025, and the financial impact of these liabilities remains significant. While the market may be underestimating the scale of these exposures, they could represent a substantial drain on 3M’s cash flow in the coming years.