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Investing.com - Goldman Sachs raised its price target on Philip Morris (NYSE:PM) to $200.00 from $190.00 while maintaining a Conviction Buy rating ahead of the company’s second-quarter results, due in 4 days. The stock has delivered an impressive 73% return over the past year, though InvestingPro analysis indicates the stock is currently trading above its Fair Value.
The investment bank cited potential upside surprises to both top and bottom-line results, driven by continued momentum behind IQOS, easing supply constraints around ZYN, and less onerous foreign exchange impact given the weakening U.S. dollar. The company maintains impressive gross margins of 66% and analysts forecast 9% revenue growth for fiscal year 2025.
Goldman Sachs noted that ZYN shipments are surpassing consumption as out-of-stock issues are increasingly being resolved, according to industry contacts in their Nicotine Nuggets survey.
Despite the uncertain and volatile macro backdrop, Goldman expects management to broadly maintain its fiscal year 2025 guidance ranges, with likely adjustments for reduced foreign exchange headwinds and higher ZYN shipments.
Goldman Sachs views Philip Morris as one of the best growth stories across broader Staples, describing it as an earnings compounder with a clear line of sight on driving sustainable long-term profitable growth as it transforms into a faster growing and more profitable business with a still compelling valuation.
In other recent news, Philip Morris International has seen a series of significant developments. UBS has raised its price target for the company to $181, reflecting updated earnings estimates and highlighting the expansion of smoke-free gross margins. Meanwhile, Citi has increased its price target to $200, maintaining a Buy rating and projecting strong performance in the second quarter, with anticipated organic sales growth of 7% and operating income growth of 11%. Jefferies initiated coverage with a Buy rating and set a price target of $220, citing the company’s leadership in heated tobacco and oral nicotine pouches as drivers of sustainable growth. Stifel reiterated its Buy rating and a $186 price target, emphasizing the importance of European growth and the company’s multi-category strategy. Additionally, the FDA has authorized Juul Labs’ e-cigarettes to remain on the U.S. market, a decision that affects stakeholders like Altria Group (NYSE:MO), which holds a stake in Juul. These recent developments underscore Philip Morris’s ongoing strategic focus on innovation and market expansion.
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