Philip Morris International falls after JPMorgan turns cautious with downgrade

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JPMorgan dropped its rating on Philip Morris International (NYSE:PM) to Neutral from Overweight due to near-term headwinds.

On the positive side, the firm noted that the tobacco giant is the global leader in both cigarettes and heated tobacco products, as well as being on track to cash in on nearly $10B of cumulative new generation products investments. On the negative side, JPMorgan analysts warned that the recent geopolitical can not be ignored.

"However, the recent tensions in Ukraine has clouded PMI’s ability to achieve its near and medium term NGP targets, with Russia and Ukraine accounting for 23% of its HTU volume. Although the MT growth algorithm remains robust (FY21-24e organic sales/EBIT/EPS CAGR of +6%/+11%/+13%) driven by the highly attractive economics of HTP and an un-stretched balance sheet provides buyback support, external factors will prove too difficult to overcome."

JPMorgan assigned a price target of $110 to Philip Morris International (PM).

Shares of Philip Morris International (PM) fell 2.20% premarket to $97.60 vs. the 52-week trading range of $85.64 to $112.48.

Comments

[bk25]

I hope PM follows the trend of BTI and MO (long term)... The best thing that ever happened to them (long term) is the so-called BAD NEWS that surrounds the stock. It's the key to success.

[hugh74jones]

I mentioned to y'all recently that PM looked overpriced, relative to other tobaccos, and to PM history and performance. So the JPM downgrade is of no surprise. Further price erosion for PM is possible, especially if current correction continues. Note that in the brief but dramatic March 2020 market correction, PM was trading well under 70. PM has great fundamentals, but I would like to see its yield more in line with MO and BTI, to step up to the plate and buy.

[bk25]

@hugh74jones well said.

[No Guilt]

@hugh74jones

Agreed

Losing 8% of revenue but keeping the same costs, paying people not to work just might do that.

Thanks government, pension funds, institutional investors.

[pos14265]

MO,a much better pick in my book with no European exposure!

[Trader 611]

added a place holder here, MO has been excellent.

[hitman000008]

Never a good idea to bet for almost 25% of your growth on two countries of which we know for years something can go wrong. Or did Management not read the news?

[F86 Sabre]

About twenty years or so ago, JPM came out with a sell on stock I owned. I got scared and sold for a loss. A little over two weeks after the sell recommendation was issued they changed their minds and issued a buy recommendation. Regarding the fundamentals of the company, nothing changed in those two weeks. I learned a monetarily painful (but necessary) lesson: NEVER give credence to the self serving Street ANALyst's. They are simply not to be trusted. Peter Lynch (the John Williams of investing) and Ben Graham are the only men who's investing tenants I believe in.

[SeriousUsername]

Yes thank you JPM.
I look at tobacco for yield so the lower PM's price the better.

[Dr0Doom]

I was really kicking myself last month when my PM $97 covered call was assigned, and the price was over $108. Now with PM at $93.30, I feel much better, lol.

[Shangrila Value]

"Russia and Ukraine accounting for 23% of its HTU volume"?

WOW!

That's really low level business.

[nabby01]

Backing up the truck keep on jumping more for me great Dividends. Maybe 92 come on keep jumping. JP wants to get more investors, more money for JP

[bk25]

I would think cig sales would increase given the circumstances.

[Magnum1]

BTI getting killed also, adding to both! Great div on both!

[josephaoppenheim]

I just added some shares of PM to my holding of PM today. Note, though that there had been some insider selling recently when it hit about 111.

[SenBiden]

Thanks JPM for the opportunity to buy more PM and sell puts.

[TheRagingBulll]

PM back to $80. Game over

[secorewb]

I hold for the dividend. I hold for the international political risk / reward. Just part of the flow.

[ccking3]

What is HTU volume? For that matter NGP and MT?

[$23,000,000,000,000]

There may be bombs, gunfire and oil sanctions but the tobacco will always flow!

[ace246824]

So JP Morgan downgrades with a target price lower than the current price. So they mean buy the stock, right?

[Fundflow]

@ace246824 Gives them a good price for their private clients to lower their basis and buy more shares not to mention any other investment funds they run that invest in PM or similar companies in the sector [BTI]