Goldman Sachs upgrades Philip Morris, cites smoke-free product expansion
An expansion into the US makes tobacco company Philip Morris International a buying opportunity for investors, according to Goldman Sachs. Analyst Bonnie Herzog upgraded shares to buy from neutral and said the launch of a line of smokeless electronic cigarette products in the US will propel the company’s growth. “We see a more favorable risk/reward trade-off as we expect PM’s long-term growth algorithm to accelerate by 1-2 points over the next few years, with a key driver being the launch of iQOS in the US market” , wrote Herzog on a Wednesday note. The Iqos device heats tobacco instead of burning it. The consumer gets a rush of nicotine from the tobacco, but does not consume as many toxins as when smoking a conventional cigarette. “We did a thorough analysis of the US nicotine market (which increases PMs [total addressable market] by 60%) and in our baseline scenario, we believe that PM can easily reach a 10% share of the US market for combustible and non-combustible products by 2030,” added Herzog. The analyst pointed to the tobacco company’s deal with Swedish Match, which “unlocks PM access to the world’s largest and most lucrative nicotine market.” The company would have product leadership positions in two out of three major smoke-free categories in the US and could attract new consumers as regulators crack down on other tobacco products that have that flavor Philip Morris shares are little changed this year after rising more than 12% in 2022, from $25 to $120, which means shares may be up about 18% from Tuesday’s close Tobacco shares are up more than 1% in premarket trading on Wednesday The stock was upgraded to a ‘buy’ by Jefferies last week — Michael Bloom from CNBC contributed to this report.
https://www.cnbc.com/2023/01/25/goldman-sachs-upgrades-philip-morris-cites-smoke-free-product-expansion.html Goldman Sachs upgrades Philip Morris, cites smoke-free product expansion
