Philip Morris International Inc. (PM) delivered a strong performance in the third quarter, exceeding expectations and sending its shares soaring. The tobacco giant reported revenue of $9.91 billion, marking an impressive 8.4% year-over-year increase, comfortably surpassing the consensus estimate of $9.69 billion. This growth was fueled by a combination of favorable pricing adjustments, primarily due to higher combustible tobacco pricing, and a positive volume/mix shift, driven by strong sales of smoke-free products like iQOS.
The company’s confidence in its performance was further reflected in its decision to raise its fiscal year 2024 adjusted EPS outlook for the third time this year. Philip Morris now anticipates adjusted EPS to fall between $6.45 and $6.51, up from its previous guidance of $6.33 to $6.45 and exceeding the consensus estimate of $6.41.
Goldman Sachs, a prominent investment bank, believes the company is well-positioned to achieve this elevated guidance. The firm pointed to the robust momentum in iQOS, the improvements in ZYN’s out-of-stock levels, the continued growth in the smoke-free segment, and the stable performance of Philip Morris’ traditional cigarette business. This optimistic outlook prompted Goldman Sachs to reiterate its Buy rating on Philip Morris stock.
Analysts are particularly encouraged by the significant progress made in addressing ZYN’s out-of-stock issues in the U.S. This aligns with findings from their recent Nicotine Nuggets Q3 Retailer Survey and is expected to help mitigate market share loss.
The analyst’s report highlights that the third-quarter results significantly exceeded expectations, and management has demonstrated confidence in its business by raising 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.
Following the impressive earnings report, PM stock surged by 10.50% on Tuesday, closing at $131.41. The strong performance and positive outlook have solidified Philip Morris’ position as a leader in the tobacco industry and signaled a promising future for the company.
