UPDATE: Credit Suisse Raises Forecasts, Target Price on Philip Morris International To $72

Credit Suisse is increasing its 2011-12e EPS forecasts on Philip Morris Intl. PM by ~3% to $4.62 and $5.12 respectively and continues to see risk to its forecasts skewed to the upside. Credit Suisse is lifting its 12-month target price to $72 from $64 and retaining its Outperform rating. We believe that strong 1Q earnings and higher EPS guidance for the year should be good enough to keep the upward momentum in PM shares, assuming current exchange rates. Despite their recent run, Credit Suisse still likes PM shares thanks to its superior pricing power, untapped growth potential in non-OECD markets, excellent margin visibility and attractive total yield to equity holders of ~8%, all of which outweigh risks such as draconian regulatory threats and tough trading in a few markets like Spain and Ukraine. PM trades at a premium to international peers at 14.6x 2011e P/E, which is supported by superior ROIC and higher yield to equity holders. PMI valuation sits also below its historical premium to US domestic peers. The target price was set by applying a forward P/E multiple of 14x to a new 2012e EPS forecast. Credit Suisse has an Outperform rating on PM PM closed Monday at $67.61