Shares of sticky note and double-sided tape maker 3M (MMM) - Get Report were little changed on Thursday after UBS analyst Markus Mittermaier initiated coverage on the stock with a sell rating and a price target of $160 following a similar move earlier this week by analysts at Citi.
The move followed a similar negative assessment by Citi Research analyst Andrew Kaplowitz, who on Monday downgraded the stock to neutral from buy amid what his group expects will be growing chemical-exposure litigation-related risks.
In a note to clients, Kaplowitz said potential lawsuits against 3M related to chemicals called PFAS, short for per- and polyfluoroalkyl substances, “… could be a lingering overhang that prevents a re-rating to its former premium multiple.
The PFAS chemicals were manufactured in the U.S. from the 1940s through roughly the turn of the century and are harmful to health, according to the Environmental Protection Agency.
States and municipalities have been cleaning up sites involved in the manufacture of the chemicals, while governments are pursuing liability suits seeking money from producers.
3M voluntarily phased out the production of PFAS chemicals in the early 2000s and was the first company to do so, 3M CEO Mike Roman said on a recent conference call.
The company has made “voluntary agreements” with states and communities to clean up sites where it produced the chemicals, he said.
In the first quarter of 2019, 3M took a $548 million charge for litigation, which it said included $235 million for PFAS-related lawsuits. The issue also came up on 3M’s second-quarter conference call July 25.
Shares of 3M were up 0.27% at $169.19 in morning trading on Thursday. The stock has dropped approximately 10% year to date.