Why Philip Morris Is One Of The Market's Most Compelling Innovation Stories

Reviewing the third-quarter results of Philip Morris International Inc. PM, Goldman Sachs said the company is one of the most compelling innovation stories in staples.

3Q Results

Analyst Judy Hong noted that the company reported third-quarter earnings per share of $1.25, ahead of her $1.21 estimate and the $1.24 consensus estimate.

4Q Expectations

Goldman sees out-sized fourth-quarter earnings per share growth, up 45 percent, premised on phasing of strong pricing variance and lapping heavy spending behind iQos and combustible. The firm expects volume decline to moderate in the fourth quarter and flatten in 2017.

Related Link: 3 Tobacco Stocks Goldman Sachs Thinks Are Unlikely To See Positive Q3 Results

Raising Estimates, Price Target

The firm raised its full-year earnings per share estimate for the company to $4.57 from $4.54 but lowered its fourth-quarter estimate by $0.01 on forex as it marked to market. The firm also adjusted its 2017 and 2018 estimates.

Goldman reiterated its Buy rating on the shares of Philip Morris due to expectations for healthy combustible pricing growth, fading forex headwinds and accelerating momentum behind iQos driving double-digit earnings per share growth over the next few years.

The firm lifted its price target on the shares of the company to $118 from $116.

At last check, Philip Morris is down 0.60 percent at $96.01.

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