3M: Investors Should Stick With Solventum to Play Spinoff

After reviewing 3M and 3M health care, or Solventum’s filings, we reduced our fair value estimate to $99 from $127, or roughly 22%. That said, our valuation is driven by the lost earnings and cash flow associated with the spinoff. Our long-term view of 3M’s remaining industrial and consumer-facing businesses remains intact. In fact, we think these businesses will increase their top line organically by roughly 2%-3% over our long-term forecast, and enjoy volume leverage somewhere between 30% and 40%, adjusted for the impacts from both the Solventum spin and 3M’s decision to manufacture PFAS-related products.