3M (MMM) reported a "solid" Q1 operating beat despite signaling weaker revenue earlier in March, RBC Capital Markets said in a note emailed Wednesday.

3M on Tuesday reported Q1 adjusted earnings of $1.88 per diluted share on revenue of $5.95 billion.

Analysts polled by FactSet expected $1.77 on sales of $5.76 billion.

RBC Capital attributed the Q1 earnings beat to better cost management and said the company's plan to offset annualized tariff impact of around $850 million would come from sourcing, cost-out, and price.

"3M has successfully sidestepped the tariff fallout for now, with no meaningful impact from customer pre-buy, distributor destocking, or a cut to its growth outlook," RBC said.

According to the firm, the company did not expect any demand destruction from tariffs and would weigh the balance between price and sales volume before implementing any increases.

Meanwhile, the firm said the biggest "surprise" this quarter was the launch of 62 new products, up 60% year over year on top of a 32% increase in 2024.

"The pace of innovation appears to be accelerating under new CEO Bill Brown, with the company on track to launch 215 new products this year and 1,000 over the next three years," RBC said.

The firm reiterated its underperform rating on the stock and increased its price target by $2 to $100.

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