Yes, 3M beat the Street but top trader Mike Murphy says don't be fooled - the next leg is down.
Murphy thinks the Street is focussed on the headline numbers which looked pretty good - they showed 3M earned $1.59 per share, above average estimates of $1.49 per share, according to Thomson Reuters.
But, Murphy says, “If you drill down a little, you'll see the guidance isn’t great. 3M only took up the low end of the guidance," he says.
Looking at the numbers, the company increased its forecast for 2012 earnings to a range of $6.35 and $6.50 per share, up from its prior range of $6.25 and $6.50 per share.
That suggests to Murphy that 3M's future isn't quite as rosy as the stock price currently reflects.
Also Murphy says 3Ms business isn’t as well positioned as some of its rivals.
“I think the early cycle of the nature of the 3M business isn’t going to rebound as much in the back half of the year.”
And Murphy thinks the Street doesn’t understand just how much of a drag 3M’s graphics unit will have on sales.
“The display and graphics business generates 15% of revenue and they saw a decline of 11.8%,” he says.
All told he says, “I don’t think the quarter was anywhere near as good as the Street thinks.”
Murphy tells us he's looking for a 10% decline. “I’d cover around $80,” he says.