Philip Morris: Undervalued Growth Opportunity Amid Strong Zyn and IQOS Momentum

Analyst Eric Serotta of Morgan Stanley reiterated a Buy rating on Philip Morris, retaining the price target of $182.00.

Eric Serotta has given his Buy rating due to a combination of factors that highlight Philip Morris’s strong growth potential and market positioning. Despite a recent 8% decline in share price, Serotta sees this as an opportunity for investors, as the market has overreacted to short-term challenges related to Zyn product phasing. The company’s retail sales growth for Zyn has shown significant acceleration, indicating robust consumer demand.
Additionally, Philip Morris’s international IQOS sales have experienced renewed momentum, particularly in Europe and Japan, contributing to the company’s growth prospects. With a long-term growth profile that surpasses its mega-cap consumer packaged goods peers, Philip Morris is currently undervalued by approximately 27% compared to its theoretical fair value. Serotta expects this valuation gap to close as the company continues to expand its smoke-free product offerings, projected to account for a larger portion of revenue in the coming years.

In another report released today, Needham also reiterated a Buy rating on the stock with a $195.00 price target.