Philip Morris (PM) Upped to Strong Buy on Solid Q1 Results - Analyst Blog
On May 23, Zacks Investment Research upgraded Philip Morris International Inc. PM to a Zacks Rank #1 (Strong Buy) following the better-than-expected results for first-quarter fiscal 2015.
Why the Upgrade?
In Apr 2015, leading cigarette maker Philip Morris reported better-than-expected results wherein both earnings and sales surpassed the respective Zacks Consensus Estimate. Earnings increased 23.5% year over year on a constant currency basis. Sales also increased 9.1% from the year-ago level backed by higher shipment volume.
Cigarette shipment volume surpassed management’s expectations and went up 1.4% to 198.8 billion units mainly due to moderate improvement in the rate of volume decline in the industry backed by due to lower gas prices and improvement in economy.
Management also raised the fiscal 2015 guidance during the conference call. It raised the fiscal 2015 earnings growth rate outlook to 9–11% from 8–10%.
The company’s focus on the growing category of e-cigarettes and less harmful alternative tobacco products should bode well. Moreover, the company plans to increase investment in research and development in the category in 2015.
Other Stocks to Consider
Investors interested in the tobacco industry may also consider stocks like Lorillard Inc. LO, Reynolds American Inc. RAI and Vector Group Ltd. VGR. All these stocks carry a Zacks Rank #2 (Buy).
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PHILIP MORRIS (PM): Free Stock Analysis Report
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