Bad Tidings From 3M

3M's shares are currently fetching about 17 times estimated earnings when it has normally gotten more than 21 times, the brokerage calculates. J.P. Morgan also pronounced management's earnings targets aggressive but reasonable and said 3M's international exposure is positive for growth and margins.

As for the shares, J.P. Morgan noted that they've been weak performers through the recovery, falling about 10% since the Federal Reserve began tightening rates in mid-2004.

"While earnings have shown consistent, respectable growth of about 19% in 2004 and 2005, the multiple has contracted 26%, or 6 points, from its early cycle average of about 24 times," the brokerage wrote. J.P. Morgan ascribed the underperformance to below-average growth, weakness in healthcare, and management uncertainty.

"Two of the three problems here are in the past, while we think the view on earnings growth is likely to change over the next 12-18 months (either the value of consistency, or upside to expectations)," the analyst wrote.