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Investing.com - Stifel has reiterated its Buy rating and $180.00 price target on Philip Morris (NYSE:PM), a prominent tobacco industry player with a "GOOD" financial health score according to InvestingPro, following the tobacco company’s third-quarter earnings report.
Philip Morris reported 13% constant currency EPS growth and nearly 6% organic sales growth in the third quarter, demonstrating strong performance across its business segments. The company maintains impressive gross profit margins of 66.4% and has consistently raised its dividend for 17 consecutive years.
The company raised its EPS growth outlook for the year while maintaining its organic sales forecast, but lowered its operating profit growth guidance due to increased investment spending behind its U.S. ZYN business.
Philip Morris expects operating profit to increase at a low-to-mid single-digit rate in the fourth quarter of 2025, which represents a slowdown from the 12.5% growth year-to-date, primarily due to inventory headwinds for heated tobacco units and the U.S. ZYN business.
Stifel views the inventory reduction headwind as temporary and maintains a positive outlook on Philip Morris’s top-line and EPS growth profile compared to its global consumer staples peers.
In other recent news, Philip Morris International reported third-quarter earnings that exceeded analyst expectations, with an adjusted earnings per share (EPS) of $2.24, surpassing the forecasted $2.09. Revenue also outperformed predictions, reaching $10.8 billion compared to the expected $10.63 billion. Despite these strong results, the company lowered its fiscal year 2025 operating income guidance due to increased reinvestment in its U.S. Zyn product. As a result, Morgan Stanley lowered its price target for Philip Morris to $175, although it maintained an Overweight rating on the stock. Stifel also kept a Buy rating and a $186 price target, noting the company’s favorable interest expense and lower tax rate. Additionally, Philip Morris adjusted its 2025 EPS outlook upwards, projecting growth of 13.5%-15.1%. However, the operating profit guidance was revised down to 10%-11.5% due to higher promotional activity for Zyn nicotine pouches. These developments highlight the company’s strategic focus on expanding its U.S. product offerings while managing financial expectations.
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