On Tuesday, Goldman Sachs maintained a positive stance on Philip Morris (NYSE:PM) shares, reiterating a Buy rating and a $118.00 price target. The tobacco giant reported first-quarter earnings per share (EPS) of $1.50, surpassing both the analyst's and the consensus estimates, as well as the management's projected range of $1.37 to $1.42. This increase represents an 8.7% year-over-year growth.
The company's robust quarterly performance was attributed to significant market share gains for its iQOS product, double-digit heated tobacco unit (HTU) volume growth, and strong revenue from combustible tobacco products, driven by pricing strategies. These factors compensated for challenges such as greater than anticipated foreign exchange (FX) headwinds and weaker cigarette volumes.
In response to the positive quarter, Philip Morris's management revised its full-year 2024 currency-neutral growth forecasts for both revenue and earnings upwards. This adjustment is seen as achievable by the company, and it might even be on the conservative side according to the analyst. The decision to update the guidance at this early stage of the year is interpreted as a sign of management's confidence in the company's visibility and performance.
Despite the positive quarter, management has set the second-quarter EPS expectations slightly below market predictions, citing increased FX pressures and indicating a second-half weighted financial year. Even though pre-market indicators suggested a potential dip in Philip Morris stock, Goldman Sachs anticipates that the stock should perform well today given the overall positive results and the market's prior understanding of the FX challenges.
InvestingPro Insights
Philip Morris's latest earnings beat and optimistic guidance are underpinned by strong financial metrics and strategic achievements. According to InvestingPro data, the company boasts a substantial market capitalization of $146.22 billion and an attractive P/E ratio of 16.86, indicating that investors may find the stock reasonably valued based on last twelve months' earnings as of Q4 2023. The firm's impressive gross profit margin of 63.39% echoes the efficient operations and pricing strategies that contributed to this quarter's success.
In addition, InvestingPro Tips highlight that Philip Morris has not only raised its dividend for 17 consecutive years but also offers a significant dividend yield of 5.53%, showcasing the company's commitment to returning value to shareholders. With a dividend ex-date of March 20, 2024, investors interested in Philip Morris's consistent dividend payments should take note of this date. Moreover, the stock's low price volatility suggests stability, which could be comforting to investors in a market that's often subject to rapid changes.
Investors looking to delve deeper into Philip Morris's financial health and prospects can find additional InvestingPro Tips on https://www.investing.com/pro/PM. For those considering an InvestingPro subscription, be sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 5 more InvestingPro Tips available, which could provide further insights into making informed investment decisions.
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