PM Earnings: Philip Morris Gains on Strong Q2 Results

Shares of Philip Morris International (PM) gained in trading after the company reported strong Q2 results and raised its FY24 forecast. The tobacco company reported Q2 earnings per share of $1.59, a decline of 0.6% year-over-year, which beat analysts’ consensus estimate of $1.57 per share.

PM’s Revenue Breakdown

The company’s revenues increased by 5.6% year-over-year, with revenue hitting $9.47 billion. This beat analysts’ expectations of $9.2 billion. In the second quarter, PM’s key heated tobacco product, IQOS, and other heated tobacco products gained users and drove 10.2% growth in its sales volume.

Philip Morris’s smoke-free business accounted for more than 35% of its total net revenues in the second quarter. This business had 36.5 million estimated adult users of the company’s Smoke-free products, which are available in 90 markets. This business saw revenues increase by 13.6% year-over-year to $3.6 billion.

PM’s FY24 Outlook and Dividend

Looking forward, management now expects adjusted earnings to be in the range of $6.67 to $6.79 per share, compared to its prior forecast between $6.55 and $6.67 per share. For reference, analysts had projected earnings of $6.33 per share.

The company raised its forecast banking on higher cigarette prices and the increasing sales of its nicotine pouch brand ZYN. PM has assumed that its shipment of nicotine pouches will hit volumes between 560 and 580 million cans in the U.S. this year.

In addition, PM declared a quarterly dividend of $1.30 per share or a dividend of $5.20 per share on an annualized basis.

Is PM a Buy or Sell?

Analysts remain cautiously optimistic about PM stock, with a Moderate Buy consensus rating based on five Buys and one Sell. Over the past year, PM has increased by more than 15%, and the average PM price target of $111.33 implies an upside potential of 1.22% from current levels. These analyst ratings are likely to change following PM’s Q2 results today.