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On Friday, Citi analysts, led by Simon Hales, increased their price target on Philip Morris International Inc. (NYSE:PM) shares, boosting it from $147.00 to $163.00 while reiterating a Buy rating on the stock. The tobacco giant, currently trading at $144.76 with a market capitalization of $225 billion, has seen the adjustment after its strong performance at the end of 2024 and a positive outlook for 2025. According to InvestingPro data, the stock has delivered an impressive 67% return over the past year.
The analysts at Citi have updated their model to account for Philip Morris’s robust finish in 2024 and the company’s optimistic projections for the upcoming year. They anticipate heated tobacco unit (HTU) volume growth of 10.1% to 154 billion, aligning with the company’s guidance of 10-12%. Additionally, expectations for U.S. nicotine pouch volumes are set at 805 million cans, which falls within the guided range of 780-820 million. InvestingPro subscribers can access over 15 additional exclusive insights about Philip Morris, including detailed analysis of its financial health and growth prospects.
Philip Morris’s continued strong revenue and margin growth in combustible products, coupled with further margin expansion in smokeless products, has led Citi analysts to project an 11.2% increase in the company’s organic operating income for fiscal year 2025, which is within the company’s guidance range of 10.5-12.5%. Despite an anticipated higher tax rate of 23%, the significant revenue and margin growth has led to an approximate 4% increase in Citi’s earnings per share (EPS) estimates.
For fiscal year 2025, Citi now expects Philip Morris to achieve an adjusted EPS of $7.16, which is comparable to the company’s guidance of $7.04-$7.17. The analysts underscored the potential for earnings to outperform, citing new Zyn capacity in the U.S. and expanding gross margins for both combustible and smokeless products, aided by economies of scale in the latter category.
The updated price target of $163 is a result of rolling forward the discounted cash flow (DCF) model and reflects the analysts’ continued confidence in Philip Morris’s stock, as they maintain their Buy rating. The company maintains impressive gross profit margins of 65%, and while analyst targets range from $102 to $165, the current consensus recommendation remains a Buy. For comprehensive analysis including Fair Value estimates and detailed financial metrics, investors can access the full Pro Research Report available on InvestingPro.
In other recent news, Philip Morris has been the subject of various developments. Stifel analysts, led by Matthew Smith, recently raised their price target on Philip Morris shares to $160 from $145, maintaining a Buy rating. This adjustment was influenced by the company’s fourth-quarter earnings, showing a 10% growth in earnings per share to $1.55, surpassing Stifel’s estimates. This was supported by over 7% organic sales growth and a 140 basis point expansion in operating profit margin.
Philip Morris has also projected an optimistic outlook for 2025, with expectations of 6-8% organic sales growth and 10.5% to 12.5% EPS growth. The company’s forecast of foreign exchange rates suggests only a 3% headwind, less severe than anticipated. Stifel’s revised revenue and earnings estimates for 2025 primarily reflect the growth of smoke-free products.
In addition, the U.S. Food and Drug Administration (FDA) authorized a range of nicotine pouches produced by Swedish Match, a subsidiary of Philip Morris. This authorization encompasses all ZYN nicotine pouches currently marketed by the company in the U.S., marking the first such approval for nicotine pouch products in the country. The FDA’s decision is aimed at providing adult smokers with alternatives to traditional tobacco products. These are recent developments for Philip Morris, reflecting a positive trajectory for the company.
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