3M: Legal Settlement Contains Some Risk, but Lingering Liabilities Create Too Much Uncertainty

We reduce our 3M fair value estimate to $121 from $127. However, we maintain our wide moat rating and High Morningstar Uncertainty Rating, for now. We base our fair value estimate reduction on 3M’s perfluoroalkyl or polyfluoroalkyl substance settlement dated June 22. We think 3M’s total PFAS liabilities are about $20 billion, including the June 22 settlement. However, including its Combat Arms earplug lawsuits, we think its legal liabilities rise to about $24 billion in a base-case scenario.