Smoke-Free Business Momentum Might Change the Case for Investing in Philip Morris International (PM)

• Earlier this week, Philip Morris International reported continued progress in its transition to smoke-free products, highlighting notable gains in its reduced-risk portfolio and strong pricing power across key markets.
• A central insight is that the company's smoke-free transformation and cost-saving initiatives are supporting its long-term ambition to decrease reliance on combustibles and enhance profitability.
• We'll explore how the recent momentum in Philip Morris International's smoke-free business could reshape its long-term investment outlook.

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Philip Morris International Investment Narrative Recap

To be a shareholder in Philip Morris International today, you need to believe the company can successfully shift from traditional cigarettes to smoke-free products, and that this transition can offset ongoing declines in combustion volumes. The recent update suggests solid momentum in smoke-free products and ongoing pricing strength, supporting the main short-term catalyst of smoke-free growth. At the same time, the biggest risk, regulatory pressure and volume declines in combustibles, remains, though this news does not materially alter that risk in the near term.

Among recent announcements, the revised corporate guidance on July 22 stands out. Management projected full-year diluted EPS of US$7.24 to US$7.37 for 2025 and highlighted organic net revenue growth of 6 to 8 percent, underlining a focus on profitability during its smoke-free transition. This aligns directly with the company’s ambition to reduce reliance on declining cigarette volumes and maintain margin growth through its higher-value platforms.

By contrast, investors should be aware of how regulatory shifts in key markets could...

Read the full narrative on Philip Morris International (it's free!)

Philip Morris International's outlook anticipates $49.3 billion in revenue and $14.4 billion in earnings by 2028. This is based on an expected annual revenue growth rate of 8.1% and a $6.2 billion increase in earnings from the current $8.2 billion.

Uncover how Philip Morris International's forecasts yield a $186.50 fair value, a 12% upside to its current price.

Exploring Other Perspectives

The most pessimistic analysts were projecting slower growth even before this news, expecting revenue to rise just 6.7% annually and profit margins to hit 30.1% by 2028. If you see more risk than opportunity in regulatory headwinds or social attitudes, this view may resonate with you. There is a real difference in perspective here, so it’s useful to see how the recent momentum in smoke-free could affect either narrative going forward.

Explore 10 other fair value estimates on Philip Morris International - why the stock might be worth as much as 32% more than the current price!

Build Your Own Philip Morris International Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Philip Morris International research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Philip Morris International research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Philip Morris International's overall financial health at a glance.

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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.

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