Stifel analyst Matthew E. Smith reiterated his rating on Philip Morris International (NYSE:PM) as a “buy” and raised his price forecast from $138 to $145.
Yesterday, the Marlboro maker reported third-quarter sales of $9.91 billion, up 8.4% year-over-year, beating the consensus of $9.69 billion.
Smith wrote that growth in smoke-free products is driving both organic revenue growth and profit expansion.
Net revenue increased 11.6% organically. This reflects favorable price movements, primarily due to higher prices for combustible tobacco, and favorable volumes/mix, primarily due to volume increases in smoke-free products.
Smith says there is a strong argument for ownership due to the impressive and accelerated growth of the IQOS and ZYN brands, which supports solid long-term business expansion.
The analyst highlighted that the market share has been steadily increasing in key regions such as Japan and Europe, with Europe’s share reaching 9.5% in the current quarter.
Also read: Marlboro maker Philip Morris highlights strong third-quarter performance with high prices, issues upbeat full-year forecast
With most of the flavors banned in Europe, Smith added that intra-market sales (IMS) and market share recovery indicate promising growth potential for IQOS in the region.
Philip Morris has raised the lower end of its 2024 U.S. ZYN volume forecast, now forecasting 570 million to 580 million cans, an increase of 10 million cans at the lower end. Analysts estimate a total of 579 million cans, reflecting more than 50% growth.
For 2025, analysts expect EPS growth of 9.5%, driven by organic revenue growth of 8% and margin expansion from smoke-free products.
This included a 10% increase in organic operating profit of over 7 percentage points driven by volume growth and price/mix contributions.
Price Action: PM stock is trading 0.36% lower at $130.94 at last check on Wednesday.
Photo by nawamin on Shutterstock
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This article: Philip Morris’ third quarter driven by smoke-free products as market share rises in key regions: Analysts predict growth across IQOS and ZYN brands
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