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Philip Morris Stock Fell on Jefferies Downgrade

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Stock performance

On August 24, after Jefferies downgraded Philip Morris International (PM) and lowered its price target, PM stock fell. The low was $79.42 before closing the day at $79.69, which represents a fall of 3.2% from its previous day’s closing price.

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Year-to-date performance

Since the beginning of 2018, Philip Morris stock has fallen 24.6%. The increase in tobacco regulations, a decline in cigarette shipment volumes, and rising competition in RRP (reduced-risk products) led to the fall in the stock.

In that same perioid, peers Altria Group (MO) and British American Tobacco (BTI) fell 17.7% and 24.9%, respectively. The broader comparative index, the Consumer Staples Select Sector SPDR ETF (XLP), returned -5%.

Analysts’ expectations

For the next four quarters, analysts expect Philip Morris to post revenue of $29.69 billion, which represents a fall of 2.3% from $30.39 billion in the corresponding four quarters of the previous year. They expect the company’s EPS to rise 3.2% to $5.16 during that period.

Valuation multiple

As of August 24, Philip Morris was trading at a forward PE multiple of 15.0x compared to 20.0x at the beginning of 2018. The fall in the stock led to a fall in its valuation multiple. That same day, Altria was trading at a forward PE multiple of 14.0x.

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