Philip Morris Beats Q1 Estimates

Philip Morris International Inc. (PM) has reported strong results for the first quarter ended March 31, 2022. Following the news, shares of the cigarette and tobacco manufacturing company rose 2% on Thursday.

Philip Morris reported quarterly net revenues of $7.75 billion, up 2.1% from the same quarter last year. Further, the figure surpassed the Street’s estimate of $7.43 billion. The company witnessed organic growth of 9% during the quarter.

A favorable mix, driven by higher heated tobacco unit and cigarette volume, along with a rise in device sales, favored the growth witnessed in sales.

The company reported quarterly adjusted earnings of $1.56 per share, down one cent from the year-ago quarter. However, the figure topped the consensus estimate of $1.49 per share.

PM’s total shipment volume increased 4.9% in the first quarter.

The CEO of Philip Morris, Jacek Olczak, said, “We expect to deliver robust top- and bottom-line growth this year on a pro forma adjusted basis, including fullyear adjusted diluted EPS growth of 9% to 11%, excluding currency. This gives us confidence in achieving our 2021 to 2023 compound annual growth targets, on a pro forma basis, and our ambition to become a majority smoke-free company by 2025.”

Outlook

Philip Morris expects to report 2022 adjusted EPS in the range of $5.45-$5.56, compared with $6.08 reported in 2021. Excluding earnings from Russia and Ukraine, and currency impacts, EPS is anticipated to be $5.98 – $6.09.

Total cigarette and heated tobacco unit shipment volume change is expected to remain flat or rise 1%. Also, adjusted net revenue growth between 4.5% to 6.5% is expected on an organic basis.

For the second quarter, the company anticipates adjusted earnings of $1.19 to $1.24 per share.

Stock Rating

Following the release, Morgan Stanley analyst Pamela Kaufman reiterated a Buy rating on the stock and raised the price target to $112 from $104. The new price target implies upside potential of 6.6% from current levels.

Consensus among analysts is a Moderate Buy based on six Buys and three Holds. Philip Morris’ average price target of $110.11 implies upside potential of 4.8%.

Insider Trading

Sentiments of corporate insiders seem to be Very Negative on Philip Morris. This means that over the past quarter there has been an increase in insiders selling their shares of PM.

Conclusion

Abruption of business in Russia is expected to impact Philip Morris’ performance as Russia made up almost 10% of the company’s total shipment volumes in 2021 and accounted for 6% of its revenues.

Philip Morris’ volatile earnings history, along with negative sentiments of insiders and hedge funds, may not work in its favor in the near term.

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