3M's (MMM) new management has implemented turnaround initiatives that are starting to have a positive impact, and forward organic estimates now appear well calibrated, Morgan Stanley said.

Consensus estimates predict organic sales growth of 2% to 3%, down from about 4% a year earlier, reflecting more realistic expectations. The brokerage said in a Tuesday note that the market was previously too optimistic about how quickly 3M could turn around its performance amid a still-challenging consumer landscape.

3M's organic sales growth reached 3.2% in Q3, a significant improvement from the first half of the year, despite no changes in comparable base periods and a stagnant overall macro environment, according to the note.

This suggests macro outgrowth that could be sustained into 2026, supported by new product introductions, improved delivery performance, and cross-selling opportunities, the firm said.

Despite the company's stock underperforming by about 20% compared with Morgan Stanley's buy-rated peers over the past year, it is now better positioned for market growth, particularly with a less demanding organic growth target in 2026, the analysts said.

Morgan Stanley upgraded 3M's stock rating to equal-weight from underweight and raised its price target to $160 from $130.

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