Philip Morris International (PM) is looking to sell its U.S. cigar business for over $1 billion, Bloomberg reported. This potential sale is part of the tobacco company’s strategy to focus on smoke-free products and reduce reliance on traditional tobacco-based products. Currently, the company is working with advisors to assess potential buyer interest.
The cigar business was part of Swedish Match, which Philip Morris acquired in 2022. Following the acquisition, PM introduced a variety of Swedish Match products to the U.S. market, such as the ZYN nicotine pouches that have witnessed strong demand.
PM Looks to Expand Smoke-Free Offerings
The move is part of Philip Morris’ aim to generate two-thirds of its revenue from smoke-free products by 2030, a major increase from 40% in the fourth quarter. The company’s smoke-free products are available in 95 markets, providing better alternatives for legal-age adults.
Among Philip Morris’ smoke-free offerings, its heated tobacco product, IQOS, has gained traction globally. It heats tobacco instead of burning it, which helps reduce the harmful chemicals produced by combustion.
Despite this shift, the company’s traditional cigarettes, particularly the Marlboro brand, remain a key revenue driver. However, a decline in smoking rates globally along with the company’s efforts to invest in innovative products and expand its smoke-free portfolio keep PM well-poised for growth.
Is PM Stock a Buy or Sell?
Turning to Wall Street, PM stock has a Strong Buy consensus rating based on seven Buys and one Sell assigned in the last three months. At $157.75, the average Philip Morris stock price target implies 1.59% upside potential.
