Optimistic Outlook for Philip Morris: Buy Rating Despite ZYN Growth Overestimations

In a report released today, Gerald Pascarelli from Needham reiterated a Buy rating on Philip Morris, with a price target of $190.00.

Gerald Pascarelli has given his Buy rating due to a combination of factors that suggest a positive outlook for Philip Morris. Despite previous overestimations regarding ZYN’s immediate growth, Pascarelli remains optimistic about the category’s future. He anticipates that by 2026, the market environment will stabilize, allowing shipments to better match consumer demand. This improvement is expected to be supported by a return to normal promotional activities and the potential introduction of ZYN Ultra, which could enhance the brand’s competitive position against rivals benefiting from recent innovations.
Additionally, with market sentiment adjusted and the company’s guidance and mid-term targets appearing achievable, Pascarelli sees the stock as offering a favorable risk/reward profile. The current stock multiple is 1.5 turns below its one-year average, suggesting undervaluation. Although estimates and the price target have been slightly reduced to $190, the overall assessment indicates a promising investment opportunity.

Pascarelli covers the Consumer Defensive sector, focusing on stocks such as Vita Coco Company, Turning Point Brands, and Celsius Holdings. According to TipRanks, Pascarelli has an average return of 2.6% and a 40.48% success rate on recommended stocks.

In another report released today, Stifel Nicolaus also maintained a Buy rating on the stock with a $180.00 price target.