3M Ramps Up Face Mask Production on White House Order, Stock Slips

The company will work with FEMA to prioritize mask orders

Assistant Editor
Apr 3, 2020 at 10:59 AM
facebook twitter linkedin

3M Co (NYSE: MMM) is down 1.3% to trade at $136.36 this morning, after U.S. President Donald Trump announced on Twitter (TWTR) last night that he was invoking the the Defense Production Act as a way of getting the company to produce more N-95 face masks. In response, the household goods manufacturer said it would increase the production of respirators and import more face masks to the U.S. in order to ease the coronavirus-related shortage, adding that it will work closely with the Federal Emergency Management Agency (FEMA) to prioritize orders for the masks. 

MMM has been chopping lower since late-January. And while the equity has distanced itself from its March 23 six-year lows, pressure from the 20-day moving average, paired with the $140 region, appear to be keeping a cap on a potential breakout. Year-to-date, 3M is down 23%. 

The sentiment surrounding MMM is lukewarm, with 10 out of 11 analysts in coverage sporting a "hold" rating. This is echoed by the 12-month consensus target price of $150.93, which is a slim 9.4% premium to current levels. 

The options pits are singing a different tune, however. At the International Securites Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) MMM sports a 10-day call/put volume ratio of 6.53. This ratio sits higher than all but 1% of earnings from the past year, suggesting long calls have rarely been more popular in the last 12 months. 

Short interest, meanwhile, is in decline, down 12.2% in the last two reporting periods. The 8.16 million shares sold short make up only 1.4% of the stock's available float, and would take a little over two days to cover at MMM's average pace of trading. 

Begin the New Year With Schaeffer's 7 FREE 2022 Stock Picks!



Special Offers from Schaeffer's Trading Partners