Philip Morris (NYSE:PM) is set to announce its fourth quarter and full-year earnings on Thursday, February 9. The ongoing strength in smoke-free products and stable shipment volume of combustible tobacco offerings are likely to support its financials. However, supply-chain and inflation headwinds could hurt its bottom line.
Analysts expect Philip Morris to post earnings of $1.27 per share, down from the EPS of $1.35 reported in the prior-year quarter. The higher pricing and operational efficiencies will likely support PM’s bottom line. However, inflationary cost pressure from direct materials, energy, wages, and transportation will likely weigh on its profit.
Nevertheless, Morgan Stanley analyst Pamela Kaufman increased the price target to $118 from $109 on PM stock ahead of its Q4 results. The analyst highlighted the benefits of its Swedish Match acquisition and improving foreign exchange movement for the price target increase. Swedish Match owns a portfolio of oral nicotine products.
Meanwhile, Goldman Sachs analyst Bonnie Herzog upgraded PM stock to a Buy from Neutral due to a favorable risk/reward ratio. Herzog expects the rapid expansion of IQOS (its smoke-free heated tobacco product) in the U.S. market to support its long-term growth.
It’s worth highlighting that the continued growth of IQOS and strength in combustibles had led the management to expand its top-line forecasts. PM targets 2% to 3% growth in its total shipment volumes in 2022. Moreover, its organic net revenues are forecasted to increase by 6.5% to 8%.
Is PM a Buy or Sell?
PM stock is a Moderate Buy based on seven Buy, three Hold, and one Sell recommendations. Meanwhile, analysts’ average price target of $110.27 implies 7.9% upside potential. Further, with positive signals from hedge fund managers who bought 401.2K shares, PM stock sports an Outperform Smart Score of nine.
