JPMorgan downgraded 3M (MMM) to Underweight, its equivalent of a sell rating, from Neutral, arguing that the stock's valuation does not reflect the negative catalysts facing the company.

NEGATIVE CATALYSTS: 3M's auto, electronics, and China markets are all slowing, warned JPMorgan analyst C. Stephen Tusa, Jr. Furthermore, the company's recent strategic investments indicate that it is being forced to spend more to drive growth, according to Tusa. Analysts may lower their estimates for 3M going forward, he added. While 3M bulls say that the shares should be awarded a higher multiple because 3M is in the "safety/staples" category, the stock "dramatically underperformed" other names that are considered defensive during the last economic downturn, the analyst noted.

OUTLOOK: Given 3M's high multiple and negative catalysts, the stock's risk/reward ratio is negative, Tusa believes. He thinks that the company's 2018 profits will come in below expectations.

TARGET: Tusa raised his price target on the stock to $201 from $185.

PRICE ACTION: In morning trading, 3M fell 1.5% to $210 per share.