Analysts Slap “Buy” Recommendation on This Stock: 3M Company (NYSE:MMM)

Analysts on the sell-side are offering a consensus “Buy” rating on shares of 3M Company (NYSE:MMM).  Using the following ratings scale: 1.0 Strong Buy, 2.0 Buy, 3.0 Hold, 4.0 Sell and 5.0 Strong Sell, analysts have an average recommendation of 2.70 on the shares.  Based on a recent trade, the shares are hovering around $202.20 which, according to the Street, yields significant upside potential to the $205.13 consensus price target

Stock market investors often rely on fundamental analysis for stock research. The EPS or earnings per share ratio shows the amount of company earnings that can be attributed to every share that is held. EPS lets investors directly compare one company to another when examining potential investments. Investors are typically searching for stocks that have a growing EPS. The EPS measure tends to be more telling when viewed over a longer period of time. When companies report quarterly earnings, the EPS measure is highly scrutinized by investors and analysts alike.

Wall Street firms hire hundreds of analysts who provide recommendations on stocks.  Typically, these analysts look at a company’s fundamentals, building financial models from this information in order to project future trends, specifically future earnings. 

These projections are then used as a basis for providing “buy” or “sell” recommendations.  Many investors consider these recommendations very seriously, and often times whenever an analyst changes their outlook on a stock, the price change almost immediately.

For technical traders, support and resistance lines play an important role. The support line generally displays the lowest price that investors will let a stock trade. This means that the stock price is unlikely to drop under this level. When support lines are breached, chartists may be watching for shares to move lower until they reach the next support level. The resistance line is the exact opposite of the support line. The resistance level is typically the highest price that investors will allow the stock to trade at. Traders will carefully watch the stock price when a resistance level is broken. The thought is that the price will continue to move towards the next level of resistance. Traders and investors may use support and resistance lines for various purposes. One popular use of these lines is to identify possible entry and exit points for trades.

Earnings estimates can also be manipulated, as the analysts are inclined to minimize them so that it increases the chances that a stock will “beat” the artificially lowered estimate in order to get inexperienced investors to buy.

RSI 

3M Company (NYSE:MMM)’s shares may have a significant upside to the consensus target of 205.13, but how has it been performing relative to the market?  The stock’s price is 202.20 and their relative strength index (RSI) stands at 49.33.  RSI is a technical oscillator that shows price strength by comparing upward and downward movements.  It indicates oversold and overbought price levels for a stock.  

3M Company (NYSE:MMM) shares are moving -3.14% trading at $202.20 today,

Stock market players may have differing opinions on which type of research approach is best. Individual investors who prefer buy and hold strategies may be more likely to be studying the fundamentals. Traders that are constantly buying and selling shares may be more concerned with technical analysis. High frequency traders may be willing to take on more risk entering the market. For these types of traders, entry and exit points become far more important. Traders may be relying solely on charts in order to capture profits based on day to day, hour to hour, or minute by minute price fluctuations. Long term investors may not be as concerned with the daily ups and downs of the market.

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