3M raises EPS outlook to $9.10–9.15 on pricing, chip demand
Key Facts
3M raised its 2026 adjusted earnings per share forecast to $9.10–9.15 as it reported third-quarter results on October 20, benefiting from strong sales to chipmakers and price increases, according to the company's earnings presentation and Reuters. Quarterly adjusted earnings per share were $2.50, according to the presentation. That represented growth of 12% from a year earlier. Earnings exceeded analysts' expectations of $2.38, according to London Stock Exchange Group data cited by Reuters. The news agency attributed the improved performance to chip-related sales and higher prices that supported profit margins, as spending on artificial intelligence data center infrastructure expands.
The outlook update coincided with a change in the calculation of adjusted results to exclude amortization of intangible assets, according to the chief financial officer on the earnings call. The change adds about 40 basis points to the adjusted profit margin each quarter. It also adds about $0.04 to quarterly adjusted earnings per share, with comparative periods restated on the same basis. The chief financial officer said the previous annual guidance range was $8.95–9.10 after restatement under the new treatment. He said the move from that range to the current outlook represented an increase of "$0.10 above the midpoint," specifying the operational increase on a consistent accounting basis.
The company had maintained its annual outlook when it reported first-quarter results, according to its filing with the U.S. Securities and Exchange Commission. It then raised its estimates with its second-quarter results in July, according to the earnings filing for that period. Before the July revision, the annual adjusted earnings range was $8.50–8.70 per share. The company raised it at the time to $8.80–8.95 under the previous accounting basis, before excluding amortization of intangible assets from adjusted results. 3M posted second-quarter adjusted organic sales growth of 5.4% from a year earlier, according to the same filing.
While chip- and data center-related businesses remained strong, demand from automotive and consumer electronics customers remained weak, according to Reuters. As part of an expansion of its optical interconnect business, 3M announced a collaboration with GSEO on October 19, according to a company announcement reported by Investing.com. The collaboration covers the development and manufacture of optical interconnect solutions for data centers. As part of the move, 3M plans to buy about 4.7% of the company's common shares. The stake purchase is to be completed through a private placement, subject to customary closing conditions.
Under the expanded relationship with Amazon, full vesting of a tranche of warrants to buy 3M shares is tied to Amazon's cumulative payments for products reaching $6 billion, according to the company's SEC filing. That amount represents a purchasing threshold under the payment-linked warrant vesting mechanism. Following the announcement of the expanded relationship on the evening of October 19, 3M shares rose more than 5% in extended trading, according to Reuters. The announcement came on the evening before the company reported quarterly results and raised its annual outlook. In its updated coverage during the October 20 session, the news agency reported that the shares were up about 5% alongside the earnings and Amazon relationship developments.
3M expects adjusted organic sales growth of more than 3.5% in 2026, according to its earnings presentation. Chief Executive Bill Brown said expanded beam optical interconnect sales were expected to reach about $40 million this year, Reuters reported. Brown forecast sales in the business would reach $80–100 million in 2027 as the company's optical interconnect operations expand. In the nearer term, 3M expects to close its investment in GSEO in the fourth quarter of 2026, subject to customary closing conditions. Management said on the earnings call that it would provide formal 2027 guidance in January.