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Short 3M at $89: Mike Murphy’s Real Time Trade

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.





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Trader disclosure: On April 24, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long NXPI; Joe Terranova is long JPM; Joe Terranova is long JOY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Steve Grasso is long ABX; Steve Grasso is long CUBA; Steve Grasso is long GERN; Steve Grasso is long HPQ; Steve Grasso is long HSPO; Steve Grasso is long MU; Steve Grasso is long NEM; Steve Grasso is long NYX; Steve Grasso is long P; Steve Grasso is long PRST; Steve Grasso is long VVUS; Steve Grasso is long XRX; Steve Grasso is long ZNGA; Steve Grasso is long FDX; Steve Grasso is long TBT; Steve Grasso is long UAL; Josh Brown is long AAPL; Josh Brown is long EMC; Josh Brown is long NTAP; Josh Brown is long JPM; Josh Brown is long COP; Simon Baker is long AAPL; Simon Baker is long BAC; Simon Baker is long GS; Simon Baker is long JPM; Simon Baker is long MS; Simon Baker is long GLD; Simon Baker is long XLF; Simon Baker is long IBM; Simon Baker is long WMT; Simon Baker is long ADSK; Simon Baker is long DELL; Simon Baker is long IBM

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