On Friday, Citi reaffirmed its Buy rating on shares of Philip Morris International Inc. (NYSE:PM), with a steady price target of $113.00. The tobacco company is anticipated to have had a robust beginning to the fiscal year 2024, propelled by continued strong sales of Zyn, a nicotine pouch product. This product is key to the company's strategy of deriving two-thirds of its revenue from non-combustible products by 2030.
Philip Morris is expected to achieve high-single-digit (HSD) percentage organic growth in both top and bottom lines for the first quarter, aligning with the upper end of its guidance. The adjusted diluted earnings per share (EPS) is projected to be $1.40, fitting comfortably within the company's forecast range of $1.37 to $1.42.
Citi anticipates that Philip Morris will reconfirm its core financial targets for the full fiscal year during the upcoming earnings report. However, the firm also notes that a challenging foreign exchange environment could lead to slight downgrades in consensus earnings estimates and a narrowing of the EPS guidance range.
Despite potential adjustments due to currency fluctuations, Citi's position remains optimistic. The recommendation is supported by Philip Morris's leading position in the non-combustible product space and the prospective benefits from the mid-term rollout of IQOS, a heat-not-burn tobacco product, in the United States. These factors contribute to the firm's decision to uphold its twelve-month Buy rating on the stock.
InvestingPro Insights
Philip Morris International Inc. (NYSE:PM) has demonstrated resilience and strategic foresight in its transition towards non-combustible products. According to recent data from InvestingPro, the company's market capitalization stands at a robust $141.78 billion, reflecting investor confidence in its business model. The commitment to shareholder returns is underscored by a notable dividend yield of 5.7% and a history of dividend growth, with the latest increase reported at 2.36%. This dedication to dividends is further highlighted by an impressive track record of raising them for 17 consecutive years, an InvestingPro Tip that signifies the company's stable financial health and commitment to returning value to its shareholders.
Moreover, Philip Morris's gross profit margin is an impressive 63.39%, indicating strong operational efficiency and pricing power in the market. This is in line with Citi's positive outlook on the company's financial performance. The company's stock has been trading near its 52-week low, which, according to another InvestingPro Tip, may present an opportunity for investors considering the company's robust fundamentals and Citi's reaffirmed Buy rating.
For investors looking to delve deeper into Philip Morris's financials and future prospects, InvestingPro offers additional insights and tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and access the full suite of InvestingPro Tips to inform your investment decisions.
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