Philip Morris' Raised Guidance Suggests Good Visibility: Goldman Sachs Analyst

On Tuesday, Philip Morris International Inc. PM reported third-quarter revenue of $9.91 billion, up 8.4% year over year, beating the consensus of $9.69 billion.

Net revenues increased by 11.6% on an organic basis, mainly reflecting a favorable pricing variance, primarily due to higher combustible tobacco pricing, and a favorable volume/mix, mainly driven by higher smoke-free product volume.

Outlook: Philip Morris raised its fiscal year 2024 adjusted EPS outlook to $6.45-$6.51 from prior guidance of $6.33 – $6.45 versus the consensus of $6.41.

Goldman Sachs believes that the management’s raised guidance is attainable, citing strong momentum in iQOS, improvements in ZYN’s out-of-stock levels, growth in the smoke-free segment, and the steady performance of Philip Morris’ traditional cigarette business.

Goldman reiterates the Buy rating for Philip Morris.

Also Read: Philip Morris Analyst Raises Forecasts Ahead Of Q3 Earnings, But ‘Consumer Elasticities Remain A Risk’

The analyst is particularly optimistic about the significant progress in reducing ZYN out-of-stock in the U.S., aligning with insights from their recent Nicotine Nuggets Q3 Retailer Survey, which should help limit market share loss.

“Ultimately we believe management’s decision to raise guidance again this year is positive and suggests management has good visibility into its business,” the analyst writes.

The analyst says the third quarter results significantly exceeded expectations, and management raised its FY24 guidance for the third time this year.

Notably, they also increased dollar EPS growth projections, even with a larger anticipated currency headwind, highlighting the strong underlying momentum.

Price Action: PM stock is up 10.50% at $131.41 on Tuesday.

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