Bulls Bet on Bigger Gains for Booming 3M Stock

MMM stock is eyeing its fourth straight win

Deputy Editor
Jul 25, 2019 at 10:39 AM
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Industrial technology concern 3M Co (NYSE:MMM) is eyeing its fourth consecutive win today, brought on by impressive second-quarter earnings and revenue. Specifically, 3M announced adjusted quarterly profit of $2.20 per share, beating analysts' consensus $2.05 estimate, and revenue that topped expectations at $8.17 billion on strong demand in its healthcare unit.

MMM is up 3.4% at $185.43 in response -- the best Dow stock so far -- trading atop its 80-day moving average for the first time since a massive post-earnings bear gap last April. The equity saw a huge drop following that gap, culminating in a three-year low of $159.37 in June, but has since managed a 16% rebound off this bottom.

Analysts are approaching the stock with caution still, with not a single member of the brokerage bunch chiming in yet. Right now, nine call the stock a "hold," and two say it's a "strong sell." Plus, the consensus 12-month target price of $177.88 is at a discount to current levels. 

Options traders took a slightly more bullish stance ahead of MMM earnings, with 1.72 calls bought to open for every put during the last 10 days on the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 80th percentile of its annual range. This indicates a healthier-than-usual appetite for calls over puts of late. 

More of this bullish action is happening today, too, with almost 14,000 calls already across the tape, seven times the expected intraday amount and 1.7 times the number of puts traded. The weekly 8/2 187.50-strike call is the most popular, followed by the weekly 7/26 185-strike call, with positions likely being bought to open at both contracts. 

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