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Philip Morris (PM) Offers Growth Targets for 2024-2026 Period
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Philip Morris International Inc. (PM - Free Report) , which has been strongly committed to being a majority smoke-free company, highlighted its growth targets at its 2023 Investor Day on Sep 28. Management aims to generate more than two-thirds of its total net revenues from smoke-free products by 2030.
Philip Morris unveiled its growth targets for the 2024-2026 period, which underscores its confidence in future prospects. This optimism is mainly rooted in the strength of the company’s leading smoke-free brands, IQOS and ZYN, along with constant innovation. PM foresees substantial opportunities for further expansion, both in the United States and overseas.
Shares of PM were up about 3% on Sep 28. The Zacks Rank #3 (Hold) stock has rallied 18.3% in the past year, outpacing the industry’s growth of 10.7%.
Targets for 2024-2026
Philip Morris offered its compound annual growth targets for 2024-2026. This includes organic net revenue growth of 6-8%, which takes into account increasing total shipment volumes. Adjusted operating income (OI) is likely to grow at a CAGR of 8-10% on an organic basis. Finally, management envisions adjusted earnings per share (EPS) to increase at a CAGR of 9-11%, excluding the impact of currency. This guidance assumes the current corporate income tax rates.
Moving on, the company projects heated tobacco unit shipment volumes of 180-200 billion units for 2026, wherein nicotine pouch shipment volumes are likely to range from 800 million to 1 billion cans. Further, PM expects ZYN to fuel double-digit compound annual growth in net revenues and adjusted OI for the company’s total U.S. operations in the 2024-2026 period. This includes the impacts of IQOS investments.
Image Source: Zacks Investment Research
A Look at Smoke-Free Products
Consumers have been increasingly moving toward reduced-risk products (RRPs) or smoke-free alternatives, driven by the growing awareness of the health risks associated with traditional cigarette smoking. PM is progressing well with its business transformation, with smoke-free products generating 35.4% of the company’s net revenues in the second quarter of 2023.
In this regard, the IQOS, PM’s heat-not-burn device, counts among one of the leading RRPs in the industry. These next-generation devices are backed by substantial scientific insights and research. The company expects such advanced and high-quality products to aid adult smokers in switching from traditional cigarettes to smoke-free options.
In the second quarter of 2023, revenues from smoke-free products (excluding Wellness and Healthcare) jumped 35.3% to $3,101 million (up 18.3% organically). In the quarter, the company witnessed continued strength in IQOS performance, along with pricing power. Total IQOS users at the end of the second quarter were estimated at roughly 27.2 million (including nearly 19.4 million who switched to IQOS and stopped smoking).
For 2023, management expects heated tobacco unit (HTU) shipment volumes of 125-130 billion units. HTU shipment volumes are likely to be about 31-33 billion units in the third quarter.
Among other initiatives, Philip Morris became the majority owner of Swedish Match on Nov 11, 2022. Management expects a robust performance from Swedish Match’s existing operations in 2023 due to the expectations of strong ZYN volumes in the United States.
Wrapping Up
Philip Morris has made remarkable strides in transitioning to a smoke-free future. The company has been focused on establishing a more sustainable growth model and playing a vital role in reducing tobacco harm. These unparalleled efforts seem fit in a world where more smokers are switching to smoke-free alternatives, leaving traditional cigarettes behind. PM is well-positioned to transform into a predominantly smoke-free company by 2030.
Solid Consumer Staple Picks
MGP Ingredients (MGPI - Free Report) , which produces and markets ingredients and distillery products, currently sports a Zacks Rank #1 (Strong Buy). MGPI has a trailing four-quarter earnings surprise of 18%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS calls for growth of 5.8% and 10.4%, respectively, from the corresponding year-ago reported figures.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales indicates growth of 6.7% from the year-ago reported number.
e.l.f. Beauty (ELF - Free Report) , a cosmetic and skincare product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.6% from the corresponding year-ago reported figure.
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Philip Morris (PM) Offers Growth Targets for 2024-2026 Period
Philip Morris International Inc. (PM - Free Report) , which has been strongly committed to being a majority smoke-free company, highlighted its growth targets at its 2023 Investor Day on Sep 28. Management aims to generate more than two-thirds of its total net revenues from smoke-free products by 2030.
Philip Morris unveiled its growth targets for the 2024-2026 period, which underscores its confidence in future prospects. This optimism is mainly rooted in the strength of the company’s leading smoke-free brands, IQOS and ZYN, along with constant innovation. PM foresees substantial opportunities for further expansion, both in the United States and overseas.
Shares of PM were up about 3% on Sep 28. The Zacks Rank #3 (Hold) stock has rallied 18.3% in the past year, outpacing the industry’s growth of 10.7%.
Targets for 2024-2026
Philip Morris offered its compound annual growth targets for 2024-2026. This includes organic net revenue growth of 6-8%, which takes into account increasing total shipment volumes. Adjusted operating income (OI) is likely to grow at a CAGR of 8-10% on an organic basis. Finally, management envisions adjusted earnings per share (EPS) to increase at a CAGR of 9-11%, excluding the impact of currency. This guidance assumes the current corporate income tax rates.
Moving on, the company projects heated tobacco unit shipment volumes of 180-200 billion units for 2026, wherein nicotine pouch shipment volumes are likely to range from 800 million to 1 billion cans. Further, PM expects ZYN to fuel double-digit compound annual growth in net revenues and adjusted OI for the company’s total U.S. operations in the 2024-2026 period. This includes the impacts of IQOS investments.
Image Source: Zacks Investment Research
A Look at Smoke-Free Products
Consumers have been increasingly moving toward reduced-risk products (RRPs) or smoke-free alternatives, driven by the growing awareness of the health risks associated with traditional cigarette smoking. PM is progressing well with its business transformation, with smoke-free products generating 35.4% of the company’s net revenues in the second quarter of 2023.
In this regard, the IQOS, PM’s heat-not-burn device, counts among one of the leading RRPs in the industry. These next-generation devices are backed by substantial scientific insights and research. The company expects such advanced and high-quality products to aid adult smokers in switching from traditional cigarettes to smoke-free options.
In the second quarter of 2023, revenues from smoke-free products (excluding Wellness and Healthcare) jumped 35.3% to $3,101 million (up 18.3% organically). In the quarter, the company witnessed continued strength in IQOS performance, along with pricing power. Total IQOS users at the end of the second quarter were estimated at roughly 27.2 million (including nearly 19.4 million who switched to IQOS and stopped smoking).
For 2023, management expects heated tobacco unit (HTU) shipment volumes of 125-130 billion units. HTU shipment volumes are likely to be about 31-33 billion units in the third quarter.
Among other initiatives, Philip Morris became the majority owner of Swedish Match on Nov 11, 2022. Management expects a robust performance from Swedish Match’s existing operations in 2023 due to the expectations of strong ZYN volumes in the United States.
Wrapping Up
Philip Morris has made remarkable strides in transitioning to a smoke-free future. The company has been focused on establishing a more sustainable growth model and playing a vital role in reducing tobacco harm. These unparalleled efforts seem fit in a world where more smokers are switching to smoke-free alternatives, leaving traditional cigarettes behind. PM is well-positioned to transform into a predominantly smoke-free company by 2030.
Solid Consumer Staple Picks
MGP Ingredients (MGPI - Free Report) , which produces and markets ingredients and distillery products, currently sports a Zacks Rank #1 (Strong Buy). MGPI has a trailing four-quarter earnings surprise of 18%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS calls for growth of 5.8% and 10.4%, respectively, from the corresponding year-ago reported figures.
Flowers Foods (FLO - Free Report) , a packaged bakery food product company, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales indicates growth of 6.7% from the year-ago reported number.
e.l.f. Beauty (ELF - Free Report) , a cosmetic and skincare product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.6% from the corresponding year-ago reported figure.