Philip Morris Stock Corrects: A Buying Opportunity?

Stock performance

Philip Morris International (PM) was trading at $69.08 on December 21, close to its 52-week low of $68.74 and 61.0% below its 52-week high of $111.25. The stock has fallen 18.3% since Philip Morris announced its third-quarter results on October 25.

Philip Morris Stock Corrects: A Buying Opportunity?

Why PM’s stock price fell

Although Philip Morris beat analysts’ revenue and EPS expectations in the last quarter, its stock fell due to Credit Suisse downgrading its stock and the Fed’s interest rate hike weakening the broader equity market. On December 20, Altria (MO) announced a $12.8 billion investment in JUUL Labs for a 35% stake in the e-cigarette manufacturer. This investment, which suggests Altria lacks confidence in Philip Morris’s IQOS (Altria is set to market it in the United States following FDA approval), may have made investors skeptical about IQOS’s long-term potential. On the day of Altria’s investment announcement, Philip Morris stock fell by more than 4.0%.

Year-to-date stock performance

This year has been tough for Philip Morris, with its stock falling 34.6%. Increased regulations and excise tax, a declining number of smokers, and rising competition in the reduced-risk product space have been pressuring the company’s stock price. In comparison, peer stocks Altria and British American Tobacco (BTI) have fallen 29.4% and 52.2%, respectively, this year, and the Consumer Staples Select Sector SPDR ETF (XLP), of which tobacco and cigarette companies comprise 10.9%, has fallen 10.1%. Next, we’ll look at analysts’ recommendations for Philip Morris stock.