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Philip Morris Gains 21% in 3 Months: How to Play the Stock?
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Key Takeaways
PM surged 20.8% in 3 months, outperforming both its sector and the broader tobacco industry.
Smoke-free products drove 44% of gross profit, with strong growth in ZYN, IQOS, and VEEV brands.
Regulatory hurdles, FX headwinds, and a premium valuation may limit PM's near-term stock upside.
Shares of Philip Morris International Inc. (PM - Free Report) have rallied 20.8% over the past three months, outperforming the Zacks Tobacco industry’s rise of 18.8% and the broader Zacks Consumer Staples sector’s growth of 8.3%. However, the stock lagged behind the S&P 500’s robust advance of 26.4% over the same period.
PM Price Performance vs. Industry, S&P 500 & Sector
Image Source: Zacks Investment Research
Performance among major tobacco players, Altria Group Inc. (MO - Free Report) , Turning Point Brands, Inc. (TPB - Free Report) and British American Tobacco p.l.c. (BTI - Free Report) , has varied over the past three months. Philip Morris was outpaced by Turning Point Brands, which surged 34%, and British American Tobacco, which gained 24.3%. However, PM outperformed Altria, which posted a more modest increase of 9.2% during the same period.
As of the last trading session, PM closed at $178.88, 4.2% below its 52-week high of $186.69, reached on June 16, 2025. Philip Morris has shown solid upward momentum, currently trading above both its 50-day and 200-day simple moving averages (SMA) of 175.36 and $143.14, respectively, which are key indicators of price stability and long-term bullish trends.
PM Trades Above 50 & 200-Day Moving Average
Image Source: Zacks Investment Research
With PM’s robust performance on the bourses, some investors may consider buying this stock right away. However, before taking any decision, it is important to understand the reasons behind this surge. Does the company have what it takes to sustain this momentum, or are there potential headwinds ahead? Let’s take a closer look.
What’s Driving the Rally in Philip Morris?
Philip Morris’s recent stock surge is underpinned by a strong first-quarter performance, highlighted by growth in earnings, revenues and margins. The company posted adjusted EPS of $1.69 and saw double-digit growth in both organic revenues and operating income. This strong start to the year reassured investors about the company’s ability to execute on its long-term strategy, even amid macroeconomic uncertainty and regulatory pressures.
Central to this momentum is the continued success of Philip Morris’s smoke-free portfolio, which now contributes 44% of total gross profit. In the first quarter, shipments of smoke-free products rose over 14.4%, with strong demand for ZYN nicotine pouches in the United States, robust IQOS growth in key markets like Japan and Europe, and expanding traction for the VEEV e-vapor brand. The smoke-free segment also saw organic gross margins climb above 70%, underscoring the profitability of PM’s shift away from traditional combustibles.
Philip Morris made solid progress on its cost and productivity initiatives in the first quarter, delivering over $180 million in gross cost savings across manufacturing and SG&A. This performance keeps the company on track to achieve its $2 billion cost-savings target for 2024-2026. The margin expansion achieved during the quarter reflects the impact of these efficiencies, even as the company continued to invest behind the growth of its smoke-free portfolio.
Looking ahead, on its last earnings call, management raised its full-year guidance, adjusted earnings forecast to a range of $7.36 to $7.49, representing 12% to 14% growth in dollar terms. Management expects continued momentum from its smoke-free business, led by expanded ZYN capacity, broader distribution, and ongoing product innovation.
What Could Limit Further Upside for Philip Morris?
There are several factors that could limit near-term upside for Philip Morris. One of the most pressing concerns is regulatory uncertainty, particularly in international markets where the company’s smoke-free products are expanding. In Europe, for example, the characterizing flavor ban continues to weigh on product volumes, creating headwinds for growth and temporarily slowing momentum in key markets.
Philip Morris’ financial performance was affected by currency fluctuations. In the first quarter, the company faced notable currency headwinds that impacted its financial results, including a 7-cent unfavorable currency variance on adjusted EPS due to non-recurring transactional losses, led by currency volatility. Overall, currency had a negative impact of 3.9 percentage points. This makes the company vulnerable in volatile currency environments.
Philip Morris’ Valuation Picture
From a valuation perspective, PM is trading at a premium compared with industry benchmarks. The company’s forward 12-month price-to-earnings multiple of 22.6X remains above the industry average of 15.27X. Adding to these concerns, Philip Morris currently holds a Value Score of F, indicating potential overvaluation relative to its fundamentals. Altria Group, Turning Point Brands, and British American Tobacco are all trading at lower forward P/E ratios of 10.92X, 20.48X and 10.35X, respectively.
PM P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
How to Play Philip Morris Stock?
Philip Morris has delivered solid stock performance, outperforming its sector and industry peers, thanks to strong execution, rising momentum in smoke-free products, and disciplined cost management. Strategic efforts around IQOS, ZYN, and VEEV continue to position the company as a global leader in reduced-risk nicotine offerings. However, ongoing regulatory challenges, foreign currency headwinds, and valuation pressures may cap near-term gains. Given these dynamics, long-term investors may consider holding the stock while monitoring future catalysts. Currently, PM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Philip Morris Gains 21% in 3 Months: How to Play the Stock?
Key Takeaways
Shares of Philip Morris International Inc. (PM - Free Report) have rallied 20.8% over the past three months, outperforming the Zacks Tobacco industry’s rise of 18.8% and the broader Zacks Consumer Staples sector’s growth of 8.3%. However, the stock lagged behind the S&P 500’s robust advance of 26.4% over the same period.
PM Price Performance vs. Industry, S&P 500 & Sector
Image Source: Zacks Investment Research
Performance among major tobacco players, Altria Group Inc. (MO - Free Report) , Turning Point Brands, Inc. (TPB - Free Report) and British American Tobacco p.l.c. (BTI - Free Report) , has varied over the past three months. Philip Morris was outpaced by Turning Point Brands, which surged 34%, and British American Tobacco, which gained 24.3%. However, PM outperformed Altria, which posted a more modest increase of 9.2% during the same period.
As of the last trading session, PM closed at $178.88, 4.2% below its 52-week high of $186.69, reached on June 16, 2025. Philip Morris has shown solid upward momentum, currently trading above both its 50-day and 200-day simple moving averages (SMA) of 175.36 and $143.14, respectively, which are key indicators of price stability and long-term bullish trends.
PM Trades Above 50 & 200-Day Moving Average
Image Source: Zacks Investment Research
With PM’s robust performance on the bourses, some investors may consider buying this stock right away. However, before taking any decision, it is important to understand the reasons behind this surge. Does the company have what it takes to sustain this momentum, or are there potential headwinds ahead? Let’s take a closer look.
What’s Driving the Rally in Philip Morris?
Philip Morris’s recent stock surge is underpinned by a strong first-quarter performance, highlighted by growth in earnings, revenues and margins. The company posted adjusted EPS of $1.69 and saw double-digit growth in both organic revenues and operating income. This strong start to the year reassured investors about the company’s ability to execute on its long-term strategy, even amid macroeconomic uncertainty and regulatory pressures.
Central to this momentum is the continued success of Philip Morris’s smoke-free portfolio, which now contributes 44% of total gross profit. In the first quarter, shipments of smoke-free products rose over 14.4%, with strong demand for ZYN nicotine pouches in the United States, robust IQOS growth in key markets like Japan and Europe, and expanding traction for the VEEV e-vapor brand. The smoke-free segment also saw organic gross margins climb above 70%, underscoring the profitability of PM’s shift away from traditional combustibles.
Philip Morris made solid progress on its cost and productivity initiatives in the first quarter, delivering over $180 million in gross cost savings across manufacturing and SG&A. This performance keeps the company on track to achieve its $2 billion cost-savings target for 2024-2026. The margin expansion achieved during the quarter reflects the impact of these efficiencies, even as the company continued to invest behind the growth of its smoke-free portfolio.
Looking ahead, on its last earnings call, management raised its full-year guidance, adjusted earnings forecast to a range of $7.36 to $7.49, representing 12% to 14% growth in dollar terms. Management expects continued momentum from its smoke-free business, led by expanded ZYN capacity, broader distribution, and ongoing product innovation.
What Could Limit Further Upside for Philip Morris?
There are several factors that could limit near-term upside for Philip Morris. One of the most pressing concerns is regulatory uncertainty, particularly in international markets where the company’s smoke-free products are expanding. In Europe, for example, the characterizing flavor ban continues to weigh on product volumes, creating headwinds for growth and temporarily slowing momentum in key markets.
Philip Morris’ financial performance was affected by currency fluctuations. In the first quarter, the company faced notable currency headwinds that impacted its financial results, including a 7-cent unfavorable currency variance on adjusted EPS due to non-recurring transactional losses, led by currency volatility. Overall, currency had a negative impact of 3.9 percentage points. This makes the company vulnerable in volatile currency environments.
Philip Morris’ Valuation Picture
From a valuation perspective, PM is trading at a premium compared with industry benchmarks. The company’s forward 12-month price-to-earnings multiple of 22.6X remains above the industry average of 15.27X. Adding to these concerns, Philip Morris currently holds a Value Score of F, indicating potential overvaluation relative to its fundamentals. Altria Group, Turning Point Brands, and British American Tobacco are all trading at lower forward P/E ratios of 10.92X, 20.48X and 10.35X, respectively.
PM P/E Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
How to Play Philip Morris Stock?
Philip Morris has delivered solid stock performance, outperforming its sector and industry peers, thanks to strong execution, rising momentum in smoke-free products, and disciplined cost management. Strategic efforts around IQOS, ZYN, and VEEV continue to position the company as a global leader in reduced-risk nicotine offerings. However, ongoing regulatory challenges, foreign currency headwinds, and valuation pressures may cap near-term gains. Given these dynamics, long-term investors may consider holding the stock while monitoring future catalysts. Currently, PM carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.