3M Company (NYSE:MMM) traded at $143, pointing to a lower close this week to continue with a losing streak. The decline comes as the company announces the suspension of all operations in Russia.
The Russian crisis is however just one of the several concerns that investors have over 3M. Ongoing legal matters expose the company to contingent liabilities, while revenues may be affected by falling demand for ventilators as the pandemic eases.
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Despite the challenges, 3M is hopeful that it will post more than $10 EPS. The company also hopes to record significant mid-digits growth in revenues this year.
Investors seem not inspired by the guidance but a look at the price may change market sentiment in the coming days or weeks.
3M is a buy with the RSI below 30
3M stock has been plummeting since June 2021. The declining momentum accelerated in January this year before slamming the brakes in February upon the announcement of earnings.
Over the last three weeks, the stock still closed lower. The losing momentum has declined significantly as the RSI hit below 30.
While an RSI below 30 is a good indicator to buy, we think there might still be a chance to catch 3M lower at a price of $125. 3M is likely to complete the declining pattern at $125 before it can finally start rising. Nonetheless, 3M is still a buy at the current price, considering that it is trading at a key support level of $140, and the RSI is below 30.
Summary
3M faces high risk due to ongoing legal matters that may lead to significant contingent liabilities. The stock has been on a bearish trend for a long while. The bearish momentum is easing off and may end at $125.
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