Bank of America has increased its price target for Philip Morris International (PM, Financial), raising it to $182 from the previous target of $175 while maintaining a Buy rating on the stock. This adjustment comes in response to Philip Morris's robust performance in the first quarter, marked by significant growth in its smoke-free product segment.
Key drivers of this growth included a 20.4% increase in smoke-free sales and a substantial 33.1% rise in smoke-free gross profit. These factors contributed to positive developments in the company's organic net sales, gross profit, and operating income during the period.
Furthermore, the firm's earnings per share (EPS) projections for 2025 through 2027 have been slightly elevated. Adjustments to the company's models, considering updated foreign exchange forecasts and a modestly higher outlook for ZYN volumes, have led to an increase of 27 cents in EPS estimates for each year. The revised estimates are $7.48, $8.25, and $9.04 for 2025, 2026, and 2027, respectively.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for Philip Morris International Inc (PM, Financial) is $161.72 with a high estimate of $190.00 and a low estimate of $102.00. The average target implies an downside of 3.80% from the current price of $168.11. More detailed estimate data can be found on the Philip Morris International Inc (PM) Forecast page.
Based on the consensus recommendation from 15 brokerage firms, Philip Morris International Inc's (PM, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Philip Morris International Inc (PM, Financial) in one year is $125.84, suggesting a downside of 25.14% from the current price of $168.11. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Philip Morris International Inc (PM) Summary page.
PM Key Business Developments
Release Date: April 23, 2025
- Organic Net Revenue Growth: +10.2%, reaching $9.3 billion.
- Smoke-Free Business Revenue Growth: +20% organic net revenue growth.
- Smoke-Free Business Gross Profit Growth: +33% organic gross profit growth.
- Adjusted Operating Income Growth: +16% organic growth, +250 basis points expansion in adjusted OI margins to 40.7%.
- Adjusted Diluted EPS Growth: +17.3% in constant currency, +12.7% in dollar terms to $1.69.
- IQOS HTU-Adjusted IMS Growth: +9.4%.
- ZYN Shipment Growth: +53%, reaching 202 million cans.
- VEEV Shipment Growth: Shipments more than doubled year-on-year.
- Combustible Net Revenue Growth: +3.8% organic growth.
- Gross Margin Expansion: +340 basis points on an organic basis.
- SG&A Cost Savings: Over $180 million in gross cost savings in Q1.
- 2025 Adjusted Diluted EPS Forecast: $7.36 to $7.49, reflecting +12% to +14% growth in dollar terms.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Philip Morris International Inc (PM, Financial) reported a strong start to 2025 with double-digit increases in organic net revenue, operating income, and adjusted diluted EPS.
- The smoke-free business performed exceptionally well, with shipment volumes up 14.4% year on year and organic net revenue growth of 20%.
- ZYN shipments in the US increased by 53%, exceeding initial expectations, and international nicotine pouch can volumes grew by 53%.
- IQOS delivered close to 10% HTU-adjusted IMS growth, with strong performance in Japan and Europe.
- The company achieved a 16% organic operating income growth and a 250 basis points expansion in adjusted operating income margins to 40.7%.
Negative Points
- Currency volatility led to a $0.07 unfavorable currency variance, impacting adjusted diluted EPS.
- There was a notably negative geographic mix in combustibles due to increased volumes in lower-margin markets like Turkey and Egypt.
- The annualization impact of the EU characterizing flavor ban affected IQOS growth in Europe.
- The company faces uncertainties in the global economic outlook, which could impact future performance.
- ZYN experienced out-of-stock issues in the US, affecting retailer inventories and potentially slowing growth.
