Philip Morris Analyst Raises Forecasts Ahead Of Q3 Earnings, But 'Consumer Elasticities Remain A Risk'

Tobacco giant Philip Morris International Inc. PM invested $232 million to expand its Kentucky facility. 

Goldman Sachs analyst Bonnie Herzog expects the Marlboro parent company to report strong results for its fiscal third quarter on Oct. 22.

Herzog reiterated a Buy rating and raised the price target from $126 to $140.

The Philip Morris International Thesis: The cigarette producer is likely to "comfortably reach" a 10% share of the U.S. combustible and heat-not-burn market by around 2030, Herzog wrote in a note.

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The analyst listed Philp Morris's near-term catalysts as:

• iQOS momentum
• Easing ZYN supply constraints
• More favorable FX trends
• Volume returning in key European markets as a result of the EU flavor ban

Longer-term growth drivers include:

• iQOS entry into the U.S. market
• ILUMA momentum
• New ZYN capacity
• Taiwan potentially opening

"We estimate PM's currency-neutral revenue increased 7.6% in Q3 reflecting strong performance of iQOS and benefits from ZYN, although increased consumer elasticities remain a risk," Herzog added.

PM Price Action: Shares of Philip Morris had risen by 0.21% to $121.47 at the time of publication on Wednesday.

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