3M Leads Gains on the Dow After Upgrade From BofA

3M (MMM) was the best-performing stock on the Dow Jones Industrial Average Friday after Bank of America (BofA) upgraded the stock, citing optimism about the company’s direction under new CEO Bill Brown.

BofA raised its rating on the consumer and commercial products giant to “buy” from “neutral,” and lifted the stock’s price target to $120 from $105.

The analysts wrote in a Friday note that they see Brown, who took over last month, as “refocusing the company on growth and operations.” They added that the change in leadership came “at an opportune time” because 3M has spent the last several years battling class-action lawsuits over so-called “forever chemicals” known as PFAS, and military earplugs. The company has moved to exit PFAS manufacturing and spin off its health-care unit.

Analysts Cite Brown’s Focus on Growth, Operating Efficiency

The BofA analysts said that with major legal challenges for 3M settled and lower uncertainty about remaining lawsuits, “investors are likely to focus on improving operations, potential cyclical leverage, and inexpensive valuation even when adjusted for future legal liabilities.”

Analysts noted that in a video Q&A sent to 3M employees May 12, Brown “clearly stated that innovation driven organic growth and operating efficiency are his two top priorities.”

The analysts said the video message also showed Brown spent his first days at the helm visiting 3M’s manufacturing and research and development (R&D) facilities, “the two areas of the company which historically have been at the heart of 3M culture.”

3M shares closed 2.7% higher at $100.86 Friday, contributing to their over 10% gain since the start of the year.