Philip Morris International: A Definitive Shift to Smoke-Free Growth

Philip Morris International (PM) is undergoing a transformative shift from combustible cigarettes to smoke-free products, positioning it as a top defensive growth stock in 2025. The company's strategic pivot to heat-not-burn (HTU), oral nicotine pouches, and e-vapor products is delivering robust financial results, while hedge fund activity reveals a mix of caution and opportunistic accumulation. Here's why PM deserves a closer look for investors seeking resilience and growth.

Smoke-Free Transformation: Revenue Growth and Market Leadership

PM's smoke-free business now accounts for 42% of total net revenues and 44% of gross profit, up from 39% and 41% in 2024. This segment is driving organic revenue growth of 20.4%, with HTU (IQOS), oral products (ZYN), and e-vapor (VEEV) all contributing significantly.

Key Performance Highlights:
- HTU (IQOS): Global adjusted in-market sales (IMS) grew 9.4% year-over-year, with IQOS capturing 77% of the HTU category. In Japan, IQOS's share hit 32.2%, while in Europe, its adjusted market share rose to 11.4%. Key cities like Budapest, Athens, and Rome now have HTU offtake shares exceeding 30%.
- Oral SFP (ZYN): Shipments surged 53% globally, fueled by the U.S., where ZYN exceeded 200 million cans in the first quarter. Emerging markets like Pakistan and South Africa also saw strong adoption.
- E-Vapor (VEEV): Shipments more than doubled, with Europe leading growth.

PM's smoke-free portfolio now operates in 95 markets, with over 38.6 million users globally. This scale underscores the company's ability to dominate nicotine delivery innovation.

2025 Financial Outlook: Strong Growth Amid Challenges

PM's 2025 guidance is bullish, with full-year adjusted diluted EPS growth projected at 12–14%, excluding currency impacts. The smoke-free segment is expected to grow shipments by 12–14%, driven by HTU and oral SFP.