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On Friday, Stifel analysts, led by Matthew Smith, increased their price target on Philip Morris International Inc. (NYSE:PM) shares to $160 from $145, while reiterating a Buy rating on the stock. The adjustment follows Philip Morris’s release of its fourth-quarter earnings, which showcased a 10% constant currency growth in earnings per share (EPS) to $1.55. This performance exceeded Stifel’s estimates, bolstered by over 7% organic sales growth and a 140 basis points expansion in operating profit margin. The company’s impressive gross profit margin of 64.8% and market capitalization of $226 billion underscore its position as a dominant player in the tobacco industry. According to InvestingPro analysis, the stock is currently trading above its Fair Value, with the stock price near its 52-week high of $146.78.
Philip Morris has set forth an optimistic outlook for 2025, projecting 6-8% organic sales growth and 10.5% to 12.5% EPS growth on a constant currency basis. The company’s expectation of foreign exchange rates implies only a 3% headwind, which is less severe than anticipated. Stifel’s revised revenue and earnings estimates for 2025 primarily reflect the growth of smoke-free products. The company’s strong momentum is reflected in its year-to-date return of 20.75%, while maintaining its 17-year streak of consecutive dividend increases. Want deeper insights? InvestingPro subscribers have access to over 15 additional ProTips and comprehensive financial metrics for Philip Morris.
Smith commented on the company’s consistent performance, stating, "Philip Morris International reported fourth quarter earnings with the kind of quarter we have become accustomed to... Strong momentum continues in 2025 with initial guidance calling for 6-8% organic sales growth and 10.5% to 12.5% EPS growth on a constant currency basis. FX better than feared, 2025 outlook includes just a 3% drag currently."
He further explained the rationale behind the increased price target, "We are raising our 2025 estimates for revenue and earnings primarily reflecting smoke-free product growth. While we have become accustomed to the momentum, PMI’s revenue and margin expansion remain a stand-out in consumer staples."
The endorsement from Stifel underscores the strong financial health and growth prospects of Philip Morris, as the company continues to expand its presence in the smoke-free product market. With the new price target of $160, Stifel signals its confidence in the company’s trajectory for the coming year.
In other recent news, Philip Morris International posted a strong Q4 2024 performance with earnings per share of $1.55, exceeding Stifel’s estimate by $0.08, largely due to favorable foreign exchange rates. The company’s organic revenue and constant currency EPS grew by 7.3% and 9.6% respectively, with an 11.8% increase in operating profit. Smoke-free products constituted a significant portion of the company’s revenue and gross profit, at 40% and 42% respectively.
Looking forward, Philip Morris anticipates 6%-8% growth in organic revenue and 10.5-12.5% growth in both organic operating income and constant currency EPS for 2025. The company’s shipment volume of heated tobacco unit (HTU) is expected to grow by approximately 10% to 12%, and shipments of ZYN, a nicotine pouch brand, in the U.S. are projected to be between 780 and 820 million cans.
In other recent developments, the FDA authorized a range of nicotine pouches produced by Swedish Match, a subsidiary of Philip Morris. This authorization covers all ZYN nicotine pouches currently marketed by the company in the U.S. The move is seen as a significant step towards addressing the needs of the estimated 45 million Americans who regularly consume nicotine.
In related news, the Trump administration withdrew a proposal that would have banned menthol cigarettes, a decision that was welcomed by tobacco companies including Philip Morris, British American Tobacco (NYSE:BTI), and Altria Group (NYSE:MO). The withdrawal of the proposal has been seen as a positive development for these companies, removing a significant regulatory risk.
Finally, Stifel analysts maintained their Buy rating on Philip Morris with a steady price target of $145. The affirmation follows the company’s strong performance and outlook, as it progresses with its smoke-free product portfolio and financial growth objectives.
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