Philip Morris International Hits All-Time Highs: Is It Too Late to Buy the Stock?

Philip Morris International (PM) has been on a remarkable run, surging to all-time highs in recent months. The tobacco giant's stock price has soared, driven by a strategic shift towards smoke-free products and strong earnings performances. But is it too late for investors to capitalize on this momentum?

PM's transformation has been nothing short of impressive. The company has invested heavily in research and development, focusing on innovative smoke-free products like IQOS and ZYN nicotine pouches. This strategic pivot has paid off, with smoke-free products accounting for 38% of PM's total net revenues in the third quarter of 2024.

The shift towards smoke-free products has not only been a boon for PM's financials but also a catalyst for its stock price. The company's third-quarter earnings report, released on October 22, 2024, demonstrated this trend. PM reported adjusted earnings per share (EPS) of $1.91, up 14.4% year over year, and net revenues of $9.9 billion, an 11.6% increase on an organic basis. The company's total cigarette and heated tobacco unit (HTU) shipment volumes increased by 2.6% to about 198.6 billion units, while its total oral smoke-free product (SFP) shipment volume surged by 24.7%.

PM's strong financial performance has not gone unnoticed by analysts. According to data from StockAnalysis.com, the average rating for PM stock is "Buy," with a 12-month stock price forecast of $124.29. Stifel analyst Matthew E. Smith even raised the price target to $145 from $138, reflecting the company's growth potential.

However, investors should be aware of the potential risks and challenges that could impact PM's stock price in the future. The regulatory environment for tobacco products remains uncertain, and new competitors could emerge in the smoke-free products market. Additionally, PM's reliance on a single product category (tobacco) exposes it to potential risks related to changes in consumer behavior and regulatory environments.

In conclusion, PM's stock price surge is a testament to the company's successful transformation towards smoke-free products. While the company's growth prospects remain attractive, investors should be mindful of the potential risks and challenges that lie ahead. As always, thorough research and a well-diversified portfolio are essential for making informed investment decisions.