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Investing.com - Morgan Stanley has lowered its price target on Philip Morris (NYSE:PM) to $175.00 from $182.00 while maintaining an Overweight rating on the stock. According to InvestingPro data, analyst targets for PM currently range from $153 to $220, with the stock trading near Fair Value levels.
The price target reduction follows Philip Morris’s third-quarter earnings report, which showed an EPS beat driven by shipment timing, though the company lowered its fiscal year 2025 operating income guidance due to higher reinvestment in its US Zyn product. The company maintains impressive gross profit margins of 66.4% and has achieved 7.2% revenue growth over the last twelve months.
Philip Morris shares closed down 3.8% following the quarterly results announcement, while the S&P 500 remained flat. Morgan Stanley noted that the results were unlikely to address market concerns about soft Zyn takeaway trends and the company’s promotional activities.
Despite these short-term challenges, Morgan Stanley remains positive on Philip Morris’s growth prospects, citing international IQOS momentum, continued growth for Zyn (albeit slower than previously expected), and the anticipated US launch of IQOS in mid-2026. The firm highlighted that smoke-free products accounted for 41% of Philip Morris’s net revenue in the third quarter.
Morgan Stanley has reduced its fiscal years 2025-2027 EPS estimates by approximately 1%, noting that while US Zyn represents only about 7% of Philip Morris’s net revenue and 10% of operating profit year-to-date, it has a disproportionate impact on the company’s stock multiple.
In other recent news, Philip Morris International reported its third-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $2.24, compared to the forecasted $2.09. Revenue also exceeded predictions, reaching $10.8 billion against a forecast of $10.63 billion. Despite these positive results, the company decided to lower its operating profit guidance to a range of 10%-11.5% from the previous 11%-12.5%, citing increased U.S. investments, including higher promotional activity for its ZYN nicotine pouches. However, the tobacco giant raised the lower end of its 2025 EPS outlook due to a lower tax rate and favorable interest expense. Stifel has maintained its Buy rating for Philip Morris, with a price target of $186.00, following the company’s strong performance in organic sales, profit margin expansion, and EPS growth. These developments highlight the company’s strategic adjustments and financial performance as it navigates its investments and market expectations.
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