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This settlement marks a significant milestone in resolving a substantial portion of the company’s legal challenges.
The settlement amount, which will likely be paid out over several years, is notably lower than the earlier projections of $10B to $15B that some analysts had anticipated.
3M shares rose 5.2% yesterday on the news.
For 3M, this settlement represents another stride toward resolving legal disputes that have placed a burden on the company and affected its stock price. In June, 3M reached a preliminary agreement associated with “forever chemicals” in drinking water.
Subject to court approval, this agreement with municipal water providers could potentially cost 3M up to $12.5B.
Following the news, Wolfe Research analysts upgraded the stock to Peer Perform from Underperform as the settlement amount is “as good as could have been expected.”
“The remaining challenges are that there is still a highly uncertain event path, and we view the upcoming Healthcare spin as a catalyst for a dividend cut. Nevertheless, the stock finally screens as roughly fair value vs. our revised $76-140 bear/bull spread,” the analysts said in a note.
