Shares of Philip Morris International (NYSE: PM) were on an upswing in pre-market trading on Thursday after JP Morgan analyst Jared Dinges upgraded the stock to a Buy from a Hold and raised the price target to $116 from $109. Dinges’ price target implies an upside potential of 22.5% at current levels. The stock has become the analyst’s top pick in tobacco.
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Dinges pointed out that while its heated tobacco device Iqos Iluma has rapidly gained market share since its launch, it has been weighed down by supply chain constraints. The analyst expects these supply chain constraints to ease in the second half of 2023 resulting in accelerating revenues for the company.
The analyst added that at current levels, the stock offers an “attractive entry point for a unique best-in-class growth story,” and “over the medium to long term, as PMI crosses the threshold to become a majority smokefree company (which we anticipate in 2026), we see scope for valuation multiple expansion.”
Analysts are cautiously optimistic about PM stock with a Moderate Buy consensus rating based on seven Buys, four Holds, and one Sell.