Stifel has adjusted its financial outlook for Philip Morris International (NYSE: NYSE:PM), increasing the stock's price target to $138 from the previous $120, while reiterating a Buy rating.
The revision follows Philip Morris's presentation at a recent conference, where the company conveyed a confident stance on its business prospects and reaffirmed its full-year guidance for 2024.
In the presentation, Philip Morris highlighted its robust performance across all metrics without providing an update on its third-quarter guidance.
The company's growth is being driven by its smoke-free product line and resilient performance in combustible products. These factors are expected to contribute to another year of volume growth and margin expansion.
Stifel's analysis indicates that the positive trend for Philip Morris is set to continue beyond 2024. The company is actively investing in the heated tobacco category within the US market.
Additionally, improvements in the capacity of ZYN nicotine pouches are anticipated in the fourth quarter, with further investments in capacity expected to impact 2025 and 2026.
The firm maintains a positive outlook on Philip Morris's future, estimating a constant currency growth of 12.5% for 2024. The raised price target to $138 reflects this optimism and the anticipated sustained growth and investment in the company's product lines.
In other recent news, Philip Morris International has maintained its 2024 earnings forecast, despite industry challenges, expecting an 11% to 13% increase in adjusted diluted earnings per share. Philip Morris has also committed to investing in smoke-free alternatives, with smoke-free products accounting for about 38% of the company's net revenues in the first half of 2024.
In addition, the tobacco giant has invested $232 million in its Owensboro, Kentucky manufacturing facility to increase production capacity for ZYN nicotine pouches. This expansion is expected to generate 450 direct new jobs and approximately $277 million in annual regional economic impact.
Philip Morris has received positive assessments from Goldman Sachs, Deutsche Bank, and BofA Securities. Goldman Sachs added the company to its US Conviction List, while Deutsche Bank and BofA Securities maintained a Buy rating on Philip Morris shares.
InvestingPro Insights
Philip Morris International's (NYSE:PM) recent performance and future prospects are further illuminated by real-time data and analysis from InvestingPro. The company boasts an impressive gross profit margin of 63.87% over the last twelve months as of Q2 2024, underscoring its efficient operations and strong pricing power. This aligns with Stifel's positive sentiment, as high gross margins can be indicative of the company's ability to translate sales into profits effectively.
InvestingPro Tips highlight that Philip Morris has raised its dividend for 16 consecutive years, reflecting a commitment to shareholder returns. Additionally, the company has maintained dividend payments for 17 consecutive years, which is a testament to its financial stability and consistent performance. This is particularly relevant for investors seeking income-generating stocks.
With a market capitalization of $195.45 billion and a forward P/E ratio of 21.22, Philip Morris is valued significantly by the market, especially considering its revenue growth of 9.89% in the last twelve months. This revenue growth supports Stifel's outlook for sustained growth, making the company an attractive proposition for growth-oriented investors.
For those interested in further insights, there are over 10 additional InvestingPro Tips available, providing a comprehensive analysis of Philip Morris's financial health and stock performance.
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