The campaigns against smoking and the use of tobacco have led to a shift towards more reduced-risk products which can benefit Philip Morris in the quarter. However, it remains to be seen if the controversies surrounding JUUL and e-cigarettes, in general, will take a toll on the results. The industry also faces tough regulations and higher taxes.
The performance of IQOS is a key topic to watch. IQOS is said to be performing well in several markets and the company anticipates that by 2025, at least 30% of its total shipment volume will come from smoke-free products.
Also read: Altria’s plans might not be panning out but here’s why the company will be fine
Another area of importance is the failed merger with Altria (NYSE: MO). The talk of a potential combination had led to much anticipation and speculation and following the cancellation of the deal, the company’s future plans and strategies on a standalone basis are worth watching.
In the second quarter of 2019, Philip Morris beat analysts’ expectations with a 3.5% increase in adjusted EPS to $1.46. Revenues dipped slightly by 0.3% to $7.7 billion, hurt by currency headwinds, but managed to beat estimates. Excluding currency impacts, revenues grew 5.4% year-over-year.
For the full year of 2019, the company expects reported EPS of at least $4.94. Adjusted EPS is projected to grow at least 9% year-over-year.
Shares of Philip Morris have gained 16% year-to-date. The majority of analysts have rated the stock as Buy and it has an average price target of $93.57.