Deutsche Bank has expressed confidence in Philip Morris International Inc.'s (NYSE: NYSE:PM) future growth, leading to an increase in the company's price target.
The new target is set at $135, up from the previous $118, while the firm maintains a Buy rating on the stock.
The adjustment comes following a recent briefing where Philip Morris outlined its strategy to pave the way for a Smoke-Free America.
The company is scaling up its production capabilities to support the expansion of Zyn, its oral nicotine pouch brand. Additionally, plans are underway to introduce the IQOS Iluma, a leading product in the smoke-free market, to the US in the second half of next year.
Philip Morris's portfolio includes both Zyn and IQOS, which are seen as complementary offerings that address different consumer preferences within the smoke-free product category. This diversification is a strategic move that positions the company to lead the shift towards a smoke-free future in the United States.
In other recent news, Philip Morris International has been the subject of various positive financial adjustments. Goldman Sachs has increased its price target for the company to $140, anticipating a robust third-quarter earnings report. The firm's analysis suggests an equity value of $150 per share for Philip Morris, 64% of which is tied to the company's expanding smoke-free business.
Philip Morris has also sold its subsidiary, Vectura Group Ltd., to Molex Asia Holdings Ltd., allowing Vectura to operate independently. This move is in line with the company's strategic shifts and its commitment to a smoke-free future.
In terms of earnings, the company has raised its quarterly dividend to $1.35 per share, marking a 3.8% increase. The projected earnings per share for 2024 range from $6.33 to $6.45, reflecting a 5.3% to 7.3% increase from the previous year.
Analysts from BofA Securities, Stifel, and Goldman Sachs have upgraded their financial outlook for the company. BofA raised the stock target to $139 from $125, Stifel increased the price target to $138 from $120, and Goldman Sachs added Philip Morris to its US Conviction List.
InvestingPro Insights
Philip Morris International's strategic shift towards smoke-free products aligns well with its financial performance and market position. According to InvestingPro data, the company boasts a substantial market capitalization of $188.75 billion, reflecting investor confidence in its future prospects. The company's revenue growth of 9.89% over the last twelve months and a strong gross profit margin of 63.87% underscore its financial health and ability to invest in innovative products like Zyn and IQOS Iluma.
InvestingPro Tips highlight Philip Morris's commitment to shareholder value, noting that the company "has raised its dividend for 16 consecutive years" and "has maintained dividend payments for 17 consecutive years." This consistent dividend policy, coupled with a current dividend yield of 4.45%, may appeal to income-focused investors and supports the company's attractiveness as it transitions towards smoke-free products.
The company's strategic initiatives seem to be resonating with the market, as evidenced by the "strong return over the last three months" of 21.25% and a significant "large price uptick over the last six months" of 36%. These positive trends align with Deutsche Bank's optimistic outlook and increased price target.
For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Philip Morris International, providing deeper insights into the company's financial health and market position.
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