Credit Suisse Downgrade Pushes Blue Chip Stock Lower

Analysts were already overwhelmingly bearish towards the security

Digital Content Manager
Jul 6, 2021 at 10:28 AM
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Blue-chip consumer goods conglomerate 3M Co (NYSE:MMM) is attracting some mixed analyst attention this morning. The equity is down 1.6% to trade at $196.63 at last check, after Credit Suisse downgraded it to "neutral" from "outperform." The analyst in coverage does not expect significant multiple expansion for the company, despite fundamental potential upside, as sentiment towards 3M becomes more balanced relative to the market. However, the brokerage firm also raised MMM's price target to $212 from $200.

Analysts were overwhelmingly pessimistic towards the security coming into today. Of the 10 in question, eight carried a tepid "hold" or worse rating, while the remaining two called MMM a "strong buy." 

That bearish sentiment is echoed over in the options pits, where puts have been in focus lately. This is per MMM's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 99th percentile of its annual range. In other words, long puts are being picked up at a faster-than-usual clip.

This pessimism still rings true today. So far, 883 puts have already crossed the tape, twice the average intraday amount. The two most popular options are the weekly 8/6 187.50-and 190-strike puts, with new positions currently being opened at both.

These options traders are in luck, as the equity sports affordably priced premiums at the moment. The stock's Schaeffer's Volatility Index (SVI) of 15% sits in the 1st percentile of readings from the past 12 months, indicating options players are pricing in low volatility expectations for MMM.

On the charts, 3M stock cooled off in June after a May 10, two-year high of $208.95. The shares' 100-day moving average contained the pullback, though reclaiming the round-level $200 mark will be an area of focus going forward. Longer term, 3M stock sports a healthy 24.6% year-over-year lead. 

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