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Investing.com - UBS has lowered its price target on Philip Morris (NYSE:PM) to $166.00 from $177.00 while maintaining a Neutral rating, citing reduced forecasts for the company’s ZYN nicotine pouches. The tobacco giant, which has delivered an impressive 36.1% return year-to-date and maintains a robust 66.44% gross profit margin according to InvestingPro data, is currently trading near its Fair Value.
The firm has decreased its fiscal year 2025/2026 estimates for US ZYN cans to 801/922 million from 826/1,033 million previously. Revenue projections for the product have also been cut to $2.52/2.76 billion from $2.66/3.48 billion.
UBS forecasts that the US nicotine pouches industry will reach 47 billion pouches by 2030, representing 17% of total nicotine consumption with industry revenues of $10 billion, reflecting a 2024-2030 compound annual growth rate of 22%.
The firm expects ZYN to slightly underperform the broader category with an 18% compound annual growth rate as the market fragments and ZYN reduces its price gap compared to competitors. UBS noted limited brand loyalty among nicotine pouch users based on its survey data.
UBS projects Philip Morris may deliver results at the lower end of its medium-term range in 2026, with organic sales growth of 5.6%, EBIT growth of 8.0%, and EPS growth of 9.0%, though foreign exchange tailwinds could help the company achieve 11.5% reported EPS growth. The company has maintained dividend payments for 18 consecutive years, currently offering a 3.35% yield. Discover more insights about Philip Morris and access detailed financial analysis through InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.
In other recent news, Philip Morris International Inc. reported its second-quarter earnings for 2025, with an adjusted diluted earnings per share (EPS) of $1.91, which exceeded the forecasted $1.86. However, the company’s revenue of $10.14 billion did not meet expectations, falling short of the anticipated $10.31 billion. This resulted in a 1.65% revenue surprise. The earnings report reflects a mixed performance, with an earnings beat but a revenue miss. Despite the positive EPS results, the revenue shortfall has drawn attention from investors. The company’s stock experienced a decline in pre-market trading, although specific price movements are not detailed here. These developments are part of the ongoing financial updates from Philip Morris.
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