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3M Slumps, Fortive Rises After Two Very Different Analyst Calls

A Citi analyst is offering starkly different recommendations to investors on whether they should buy shares of industrial giants 3M and Fortive, with environmental litigation a potential drag on 3M's stock price.

The share prices of industrial giants 3M  (MMM) - Get 3M Company Report and Fortive  (FTV) - Get Fortive Corporation Report moved in opposite directions Monday after a Citi analyst downgraded his outlook on one while boosting the other.

The maker of Post-it Notes and Scotch tapes, among other products, 3M saw its stock price fall 1.09% to $169.60 a share after Citi analyst Andrew Kaplowitz downgraded his rating on 3M shares to neutral from buy.

The analyst cited the impact of the company’s environmental liabilities, with 3M on the hook to pay for cleanup costs at former manufacturing sites amid concerns over contamination of local drinking water supplies by a group of chemicals known as PFAS, Bloomberg reported.

“We simply see little in the way of near-term catalysts that could drive (3M) back to its historical (valuation) premium until more certainty relative to PFAS-related liability emerges,” Kaplowitz wrote.

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Nor is the PFAS issue poised to go anywhere fast, with the potential to serve as a longer-term drag on 3M amid litigation against the company related to water contamination by the industrial chemicals.

Still, the outlook for 3M is not without some positives, with Kaplowitz writing that some of the company's shorter-cycle products may be closer to hitting bottom.

By contrast, the Citi analyst boosted his rating on Fortive, with shares of the professional instrumentation and industrial technologies company rising 1.91% to $965.74 a share.

Kaplowitz raised his outlook on Fortive to buy from neutral, noting the company is in the midst of a mild industrial downturn that could stabilize and is also moving ahead with plans to separate its industrial technologies segment.