Hold 3M (MMM)
3M (MMM) reported EPS that missed estimates and lowered its guidance range this morning, causing the stock to open 4% lower. That brings MMM to its lowest level since early September, following a series of big gaps down in February and March.
Revenue rose in all segments, and was up 8% year-over-year, beating estimates. But adjusted EPS of $2.50 (up 16% over the same quarter last year) missed estimates by one cent. Worse, management lowered the high end of their 2018 EPS guidance, from $10.70 to $10.55.
The stock’s selloff this morning brings it to its lowest level in six months. We took partial profits in MMM about three weeks ago, selling one-third of our shares around 218 because of the stock’s constant selloffs. At the time, I wrote: “The stock has fallen 15% over the past 10 weeks—including several big one-day drops on high volume. (Over the same time period, the S&P 500 has lost 7%.) MMM is now at its lowest level since October, and has been below its 200-day for two solid weeks. Though the stock could bounce here (yesterday’s market rally was encouraging) there’s no obvious support level in sight, so more downside is equally possible.”
While I don’t recommend selling today—reactions to earnings misses tend to be worst on the first day, especially recently—this latest selloff simply erodes the case for MMM further. We’ll look for an opportunity to unload the rest of our shares over the coming few days.