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Investing.com - Philip Morris International (NYSE:PM), a tobacco giant with a market capitalization of $233.57 billion and impressive gross profit margins of 66.44%, maintained its Buy rating and $186.00 price target at Stifel following the company’s third-quarter earnings report that exceeded expectations across organic sales, profit margin expansion, and EPS growth. InvestingPro data shows the stock has delivered a strong 34.74% return year-to-date.
The tobacco giant raised the lower end of its 2025 EPS outlook due to a lower tax rate and favorable interest expense, while simultaneously lowering its operating profit guidance to 10%-11.5% from the previous 11%-12.5%. This adjustment reflects increased U.S. investments, including higher promotional activity for its ZYN nicotine pouches. According to InvestingPro analysis, the company maintains a healthy financial profile with a "GOOD" overall health score, supported by strong profitability metrics.
Philip Morris expects low to mid-single-digit operating profit growth in the fourth quarter, slightly below previous expectations, primarily due to inventory headwinds across both IQOS and ZYN businesses. The company anticipates a 20-30 million can inventory headwind for ZYN in the fourth quarter.
ZYN is no longer supply constrained, which allowed Philip Morris to dramatically increase promotional and marketing activity in the third quarter, including offering free tins to consumers purchasing alternative nicotine products in some locations. Third-quarter relaunch expenses approached $100 million, approximately matching the operating profit guidance reduction.
Stifel views the recent pullback in Philip Morris shares as an attractive buying opportunity, noting that fourth-quarter profit performance is not indicative of earnings growth momentum heading into 2026. The firm believes Philip Morris remains well-positioned to achieve EPS growth in line with its medium-term targets of 9-11%. With analyst price targets ranging from $153 to $220 and a consistent dividend yield of 3.72%, InvestingPro subscribers can access 8 additional key insights about PM’s investment potential through the comprehensive Pro Research Report.
In other recent news, Philip Morris International Inc. reported its third-quarter 2025 earnings, surpassing analysts’ expectations. The company achieved an adjusted earnings per share (EPS) of $2.24, exceeding the forecasted $2.09. This represents a 7.18% surprise over the predictions. Additionally, Philip Morris reported revenue of $10.8 billion, which also surpassed the anticipated $10.63 billion. Despite the positive earnings and revenue results, the company’s stock experienced a decline in pre-market trading. These developments highlight the company’s financial performance in the recent quarter.
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