Goldman Sachs Add Philip Morris To Conviction Buy (PM)

Goldman Sachs is adding Philip Morris International Inc. PM to its Conviction Buy List, and it has a $74 price target on shares. In a note to clients, Goldman writes, "We are adding Philip Morris International (PM) to the Americas' Conviction Buy list with a $74 price target or 18% total return potential (including 4% dividend yield). Simply put, we view PM as the best earnings grower among large-cap staples that is insulated to commodity inflation and levered to the weak US dollar. First, we forecast peer-leading 19% EPS growth for PM in 2011 vs. the staples average of 10%. This is driven by FX-neutral growth of 13% plus a 5%-6% FX benefit. Second, we see potential upside from Japan (around 10% of PM's revenues) driven by higher pricing and market share gains." Shares of PM are up 94 cents in pre-market trading to $66.20, a gain of 1.44%.