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3M: Moving Our Uncertainty Rating to Very High

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3M Co
(MMM)

Upon further review, we move our 3M MMM Uncertainty Rating to Very High. Consistent with our June 23 note, we think estimating 3M’s legal risks is a highly uncertain exercise. We reiterate that we think the settlement payment poses a risk to the dividend, particularly after the upcoming healthcare spinoff and with additional lingering legal risks like per- or poly-fluoroalkyl substance-related personal injury or additional environmental claims. That said, we still think the stock has value, and $20 billion for total PFAS liabilities (inclusive of the settlement), and nearly $4 billion in Combat Arms liabilities remains our base-case assessment, which is meaningfully lower than the market’s estimates. We will continue to update investors as additional facts surface.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Joshua Aguilar

Sector Director
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Joshua Aguilar is the director of resources equity research for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Aguilar joined Morningstar in 2016 as an associate on the financials team, and he was promoted to analyst on the industrials team in 2018 and to senior analyst in 2022. He has served as associates coordinator since 2021 and led Morningstar's diversity efforts as DEI co-chair since 2020. Aguilar has been a mentor to several associates on their paths to becoming analysts. He also has hosted a Morningstar earnings town hall, participated in analyzing Morningstar stock, and been a strong contributor through both client interactions and his General Electric stock call. Aguilar co-authored an Outstanding Research Achievement-winning piece with colleague Kris Inton on CEO compensation in 2021. He also has taught Morningstar's model to new hires for many years as part of the valuation committee.

Before joining Morningstar, Aguilar was a practicing business transactional attorney in Florida. He graduated magna cum laude with a bachelor's degree in political science and criminology from the University of Florida. He also has a Master of Business Administration from Rollins College and a Juris Doctor from Wake Forest University.

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