Latest news with #IQOSILUMA
Business Insider
a day ago
- Business
- Business Insider
Philip Morris (PM) Defies the Naysayers as Smoking Stays Hot in 2025
Imagine a tobacco stock surging 53% in six months—yet that's exactly what Philip Morris International (PM) has achieved, defying the usual stigma attached to sin stocks and a declining global smoker base. Unlike many of its peers, PM's story stands apart: its traditional cigarette business remains stable, heated tobacco products are experiencing rapid growth, and oral nicotine offerings are gaining momentum. Confident Investing Starts Here: Add a weak dollar boosting its predominantly international revenue, and it's clear PM's growth engine is running strong, justifying the rally and potentially signaling more upside ahead. PM's Combustible Division Remains Steady Cigarettes may seem like a dying product, but Philip Morris International's (PM) combustible division is proving otherwise. In Q1, cigarette shipment volumes rose 1.1% to 144.8 billion units, and organic revenue increased 4%, fueled by an 8.3% price hike. Marlboro's enduring brand strength, along with a 0.4% market share gain to 24.8% (excluding the U.S. and China), highlights PM's pricing power and market resilience. Strategic local manufacturing has also helped preserve margins amid rising raw material costs. The results speak for themselves: combustible gross profit rose 5.3% organically, even with some headwinds from a commercial model change in Indonesia. PM's ability to raise prices without sacrificing volume underscores the strength of its brand. While the global cigarette market is shrinking by roughly 2% annually, PM's smart execution keeps the segment profitable, helping fund its transition to next-generation nicotine products. IQOS Ignites Heated Tobacco Business Unit If combustibles are PM's foundation, IQOS is the growth engine. Heated tobacco unit (HTU) shipments surged 14.4% to 37.1 billion units last quarter, while global in-market sales rose 9.4%, including a 9.3% increase in Japan, where IQOS now holds a commanding 32.2% market share. Europe is also a key growth driver, with countries such as Hungary (41.9%) and Greece (34.4%) reporting impressive market penetration. Backed by $14 billion in R&D since 2008, IQOS now delivers higher margins than cigarettes, proving the investment is paying off. The strength lies in PM's efficient scale and relentless innovation. Its multi-category approach—bolstered by launches like IQOS ILUMA in Japan—continues to deepen consumer loyalty. Even amid challenges like the EU flavor ban in Italy, PM has offset losses with strong double-digit growth in Spain and Germany. With 38.6 million adult users globally, IQOS is far from niche—it's a global force driving PM's next phase of growth. ZYN's Meteoric Rise Opens Door to Oral Segment Then there's ZYN, Philip Morris's nicotine pouch brand, which is rapidly gaining traction in the U.S. ZYN shipments soared 53% to 202 million cans last quarter, prompting the company to raise its full-year guidance to 800–840 million cans. International markets also contributed, with 53% growth in countries such as Pakistan and the UK. Thanks to margins exceeding 70%—about five points higher than those of combustibles—ZYN played a key role in helping smoke-free products contribute 44% of the total gross profit. Smart moves, such as early capacity expansions in March, ensured that supply kept up with demand. But ZYN isn't just a U.S. story—it's a global growth play. With 182% volume growth in non-Nordic international markets, PM is leveraging its global distribution muscle and FDA clearances to accelerate expansion. The 27.2% volume growth in Q1 reflects PM's successful pivot toward discreet, high-margin alternatives that resonate with younger consumers and working professionals. It's a textbook example of how to spot and capitalize on shifting consumer preferences. Not Too Pricey for the Growth After an 80% rally, you might expect Philip Morris to be overvalued— but its forward P/E of 23, based on projected 2025 adjusted EPS of $7.36–$7.49, tells a more nuanced story. While that's not cheap for a tobacco stock, PM is far from typical. With 12–14% organic EPS growth forecasted for 2025—driven by 20.4% growth in smoke-free revenue and a weak dollar amplifying its 90%+ international earnings—this valuation appears well-supported. The weak dollar, in particular, is an underappreciated tailwind, boosting earnings in key international markets, such as Japan and Europe. Add to that $180 million in Q1 cost savings and a $2 billion efficiency target by 2026, and PM is positioned to continue expanding margins despite headwinds such as tax pressures in India. Altogether, this creates a strong case for PM to deliver 15%+ EPS growth annually in the coming years, making today's valuation look not just justified, but compelling. Is PM Stock a Buy or Sell? Wall Street remains highly bullish on Philip Morris, with a Strong Buy consensus based on eight Buy and one Hold rating over the past three months, and notably, no Sell ratings. However, PM's average 12-month stock price target of $188.67 suggests a meagre 3.3% upside over the coming year. PM Reinvents Itself as a Smoke-Free Growth Powerhouse Philip Morris is no longer your grandfather's tobacco company. Its recent surge reflects a bold transformation toward smoke-free alternatives, with ZYN and IQOS driving growth while traditional cigarettes continue to generate solid cash flow. A weak dollar is further boosting its international-heavy revenue base, and with 12–14% EPS growth projected, PM's momentum looks far from accidental—it's the mark of a company redefining its future. While its P/E of 23 isn't bargain-basement, it's a reasonable price for a business evolving into a modern, high-margin growth story. In my view, PM still appears to be an attractive option.
Yahoo
03-03-2025
- Business
- Yahoo
Philip Morris International (NYSE:PM) Seeks US$1 Billion In Potential Sale Of US Cigar Business
Philip Morris International is evaluating the sale of its US cigar business, a move aligning with its major transition towards smoke-free offerings, which may have driven its shares up 20% over the last quarter. This potential divestiture shows the company's continued commitment to evolving its portfolio, resonating positively with investors, especially as broader market sentiment shows lingering economic concerns. Within the same quarter, the company's earnings report revealed a significant net loss compared to the previous year, yet consistent sales growth provided a silver lining. The reaffirmation of earnings guidance for 2025 further emphasized its confidence, possibly supporting its share price during this uncertain period. Meanwhile, the broader market broadly decreased 1%, reflecting investor unease and external economic pressures, but Philip Morris's dedicated push towards future-focused products likely cushioned its stocks against the overall market downturns. Dig deeper into the specifics of Philip Morris International here with our thorough analysis report. Over the last five years, Philip Morris International's total shareholder return, including dividends, reached 149.40%. This performance reflects a combination of strategic adjustments and market movements. Key developments include the potential sale of the US cigar business, which echoes the company's pivot towards smoke-free products. This was complemented by higher quarterly dividends announced in 2024, indicating shareholder value focus even amidst a backdrop of fluctuating profit margins. Moreover, the company's revenue growth, with full-year 2024 sales rising to US$37.88 billion from US$35.17 billion, exhibits steady demand, despite recent financial volatility. Relative to the US Market and Tobacco industry, Philip Morris outperformed significantly over the past year, signaling investor confidence in its long-term strategic shifts. The company's capacity for resilience was further highlighted by its ability to secure a €1.5 billion credit facility in December 2024, earmarked for maintaining operational liquidity. Additionally, ongoing innovations like the launch of the IQOS ILUMA i device underscore Philip Morris's continued transformation efforts, aiming to enhance its product portfolio and future prospects. Unlock the insights behind Philip Morris International's valuation and discover its true investment potential Analyze the downside risks for Philip Morris International and understand their potential impact—click to learn more. Is Philip Morris International part of your asset mix? Tap into the analytical power of Simply Wall St's portfolio to get a 360-degree view on how they're shaping up. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NYSE:PM. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Sign in to access your portfolio
