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Investing.com - UBS raised its price target on Philip Morris (NYSE:PM) to $181.00 from $170.00 on Monday, while maintaining a Neutral rating on the tobacco giant’s stock. The company, currently valued at $281 billion, trades at a P/E ratio of 37x and offers a 3% dividend yield, having raised its dividend for 17 consecutive years.
The price target increase reflects UBS’s updated earnings per share estimates, which were raised by 0.4% for fiscal year 2025, 5.1% for 2026, and 5.0% for 2027, partly due to U.S. dollar weakness benefiting the company. According to InvestingPro, Philip Morris has demonstrated strong momentum with a 51.94% return year-to-date, though current analysis suggests the stock may be trading above its Fair Value.
UBS highlighted Philip Morris’s impressive expansion in Smoke-Free gross margins, which are expected to increase from 60.7% in fiscal year 2022 to 70.9% in fiscal year 2025, supported by U.S. ZYN products with approximately 85% margins and scale/productivity benefits from IQOS.
The firm noted strong volume growth for ZYN in the U.S. market, with fiscal year 2025 estimates of 873 million cans and revenues of $2.9 billion, benefiting from inventory replenishment.
Despite the price target increase, UBS maintained its Neutral stance on Philip Morris, suggesting that British American Tobacco (NYSE:BTI) might represent a more attractive opportunity to capture growth in U.S. nicotine pouches and new categories margin expansion.
In other recent news, Philip Morris has been the focus of several analyst updates and strategic developments. Citi has raised its price target for Philip Morris to $200, maintaining a Buy rating, and expects the company to report strong Q2 results with projected organic sales growth of 7% and operating income growth of 11%. Jefferies also initiated coverage with a Buy rating and a higher price target of $220, highlighting the company’s leadership in heated tobacco and oral nicotine pouches. Stifel reiterated its Buy rating with a $186 price target, emphasizing Philip Morris’s growth potential in Europe through its smoke-free products. UBS maintained a Neutral rating with a $170 price target, noting improvements in the U.S. market for ZYN nicotine pouches. BofA Securities increased its price target to $200, supported by the company’s smoke-free, multi-product strategy and significant innovations like ZYN. These developments reflect Philip Morris’s strategic focus on expanding its smoke-free product offerings across multiple markets. The company aims for two-thirds of its sales to come from smoke-free products, which are expected to drive future growth.
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