On Wednesday, UBS reiterated its Sell rating on Philip Morris International Inc. (NYSE:PM), maintaining a stock price target of $85.00. The announcement follows a recent decision by the Court of Justice of the European Union on March 14, 2024, concerning the taxation of heated tobacco products.
The European court ruled that supplementary taxes can be applied to heated tobacco, which would be 80% of the excise duty on cigarettes, minus the excise already applicable to the tobacco product.
The court's decision aims to align the taxation of heated tobacco with that of cigarettes, as part of an effort to deter nicotine-dependent consumers from switching from cigarettes to heated tobacco, which is also considered harmful to health.
This preliminary ruling came at the request of the Finance Court Dusseldorf in Germany and was a response to an action brought by Philip Morris International (PMI). The final ruling on this matter is expected to be issued by the German court and may be subject to challenge.
The UBS analyst's commentary indicated that this development could impact Philip Morris's business, as the taxation change is designed to discourage the use of heated tobacco products. The financial institution's price target reflects its position on the stock's potential performance in light of these regulatory developments.
Investors and stakeholders in Philip Morris International are now awaiting the final decision from the German court, which will determine the future tax landscape for heated tobacco products in the country and possibly influence the broader European market.
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