Philip Morris (PM) earnings preview: Altria, IQOS in focus for Q3

Philip Morris International Inc. (NYSE: PM) is scheduled to report third quarter 2019 earnings results on Thursday, October 17, before regular hours. Wall Street is looking at earnings of $1.36 per share. This compares to EPS of $1.44 reported in the prior-year period. Revenue is projected to grow over 2% to $7.67 billion year-over-year. 

Lower volumes and currency headwinds are likely to impact results in the third quarter. The company had forecasted total cigarette and heated tobacco unit shipment volume to decline by about 1% this year. Continuing the trend from last quarter, cigarette volumes are likely to decrease while volumes of heated tobacco units are likely to see an increase.

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.

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