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How Philip Morris Stock Reacted to Jefferies’ Upgrade

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Stock performance

Jefferies’ upgrade of Philip Morris International (PM) appears to have increased investor confidence, leading to a rise in the company’s stock price. By the end of January 19, 2018, Philip Morris was trading at $108.92, a rise of 3.7% from its previous day’s close.

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Year-to-date performance

In 2017, Philip Morris returned 15.5%, while the company’s stock price has increased 3.1% year-to-date. In comparison, since the beginning of 2018, Altria Group (MO) has declined by 0.4%, while British American Tobacco (BTI) has increased by 4.9%. Also, the S&P 500 Index (SPX) and the Consumer Staples Select Sector SPDR Fund (XLP) have returned 5.1% and 2.0%, respectively. XLP invests 13.4% of its holdings in tobacco and cigarette companies. 

Analysts’ estimates

For the next four quarters, analysts are expecting Philip Morris to post revenue of $31.3 billion, which represents growth of 14.3% from $27.4 billion in the corresponding four quarters of the previous years. During the same period, analysts are expecting the company to post EPS of $5.2, which represents growth of 15.8% from $4.49 in the corresponding four quarters of the previous year.

Valuation multiple

As of January 19, 2018, Philip Morris was trading at a forward PE (price-to-earnings) multiple of 19.9x. On the same day, Altria Group (MO) was trading at a forward PE multiple of 18.6x.

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