Philip Morris (PM) is thriving with traditional cigarettes and growth in heated tobacco products

From Yahoo Finance: 2025-06-20 20:43:00

Philip Morris International (PM) has seen its stock surge 53% in six months, defying the stigma of sin stocks. With stable traditional cigarette sales and growth in heated tobacco products, PM’s revenue is up, aided by a weak dollar. The company’s future looks promising with potential for more growth.

Philip Morris International’s (PM) combustible division is thriving, with Q1 cigarette shipment volumes up 1.1%. The Marlboro brand remains strong, driving market share gains and pricing power. Despite challenges, PM’s smart strategies keep the segment profitable, supporting its transition to next-gen nicotine products.

PM’s growth engine lies in IQOS, with heated tobacco unit shipments up 14.4% last quarter. Strong global sales, especially in Japan and Europe, show the success of PM’s innovation and scale. With 38.6 million adult users globally, IQOS is driving PM’s growth phase.

ZYN, PM’s nicotine pouch brand, is gaining traction in the U.S. and international markets, contributing to smoke-free products’ 44% of total gross profit. With strong margins and volume growth, ZYN showcases PM’s ability to capitalize on consumer preferences and drive global growth.

Despite an 80% rally, PM’s forward P/E of 23 based on projected 2025 EPS suggests a nuanced valuation. With organic EPS growth forecasted at 12-14% for 2025, driven by smoke-free revenue and international earnings, PM’s strong position and growth prospects justify its current valuation.

Wall Street is bullish on Philip Morris, with a Strong Buy consensus and no Sell ratings. However, the average 12-month stock price target of $188.67 implies a modest 3.3% upside. PM’s transformation to smoke-free alternatives, supported by a weak dollar and strong growth prospects, signal a promising future for the company.

Read more: Philip Morris (PM) Defies the Naysayers as Smoking Stays Hot in 2025