3M (NYSE: MMM) fell as much as -1.2% on September 22 to reach a 9-year low of $113.43 a share. Market participants seem to be worried by the mountain of lawsuits filed against the company, as the firm is the target of the biggest multidistrict litigation in US history based on the number of lawsuits filed.
The firm tried to control the costs arising from the 230,000 plus lawsuits by filing for a Chapter 11 in its subsidiary Aearo Technologies, which made the troublesome earplugs, the cause of the lawsuits. According to a report by Bloomberg, the court ruled against 3M, which has since filed a complaint against the ruling.
During an investor conference, the firm’s chief legal affairs officer claimed that Aearo’s Chapter 11 was not an attempt to avoid any liability on their part regarding the earplug case but rather an attempt by the company to provide efficiency in compensation for those entitled to it.
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3M chart and analysis
Year-to-date (YTD), the stock is down 35.78%, trading from $113.43 to $144.01 over the past month. The shares are currently making a new 52-week low, with both the short-term and long-term trends being negative.
While price action is well below all daily moving averages, technical analysis shows a support line at $113.05 and a resistance line at $121.59.
TipRanks analysts rate the shares a ‘moderate sell,’ with the average price in the next 12 months reaching $132.00, 15.65% higher than the current trading price of $114.14. Interestingly, out of 13 TipRanks analysts covering the stock, 8 have a hold rating, five sell, and none have a buy rating.
So far, juries have awarded more than $265 million in compensations and punitive damages. Meanwhile, MMM has underperformed the S&P 500 index, which lost 19% of its value in 2022.
For investors looking to enter the stock, a solid bet would be to wait out the litigation processes and evaluate the company; for now, there seems to be a lot weighing down the share price.
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