Philip Morris: Q1 Weak as Guided, Stronger Growth & Margins in Rest of 2023
Company Update (PM US) (Buy)
Highlights
PM shares fell 4.7% after Q1 results disappointed investors
Weakness in Q1 was guided in advance and due to one-offs
Underlying trends are strong; IQOS and ZYN again dominate
PM shares have an 18x P/E and a 5.3% Dividend Yield
We expect a total return of 51% (18% p.a.) by end of 2025. Buy
Introduction
We review our Buy rating on Philip Morris International Inc. (“PM”) after Q1 2023 results were released on Thursday (April 20). PM stock finished the day down 4.7%, which means the share price is down 8.0% in the past year:
PM Share Price (Last 1 Year)
Source: Google Finance (21-April-23).
We have followed Tobacco stocks for over a decade and began publishing our research on PM publicly with a Buy rating in 2019. Since then PM shares have returned 56% in 4 years, outperforming the S&P 500 by 10 ppt.
Investors have reacted negatively to Q1’s relatively weak growth and margin contraction. Both were guided by management in advance, and were the result of one-off factors or timing. Pricing p…