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How Philip Morris’s Valuation Compare with Its Peers

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Valuation multiple

The fall of 9.5% in Philip Morris International’s (PM) stock price since the announcement of its first-quarter earnings has led to a decline in its valuation multiple as well. As of June 26, Philip Morris was trading at a forward PE multiple of 14.5x, compared to 16.3x before its first-quarter earnings. In comparison, Altria Group (MO) was trading at a forward PE multiple of 11.1x.

Also, on June 26, Philip Morris was trading at 15.1 times analysts’ 2019 EPS estimate of $5.14, and 13.9 times analysts’ 2020 EPS estimate of $5.56 with its EPS expected to rise by 0.8% in 2019, and 8.2% in 2020.

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Analysts’ recommendations

Since Philip Morris reported its first-quarter earnings, Bank of America has upgraded the stock from “underperform” to “neutral” and has hiked its price target from $81 to $94. You can read more about Bank of America’s upgrade in Why Bank of America Upgraded Philip Morris. Also, Cowen and Company increased its price target from $80 to $86. However, Jefferies lowered its 12-month price target from $84 to $82.

Overall, analysts have a “buy” rating for Philip Morris with 57.9% of 19 analysts who follow the stock having a “buy” rating while 36.8% say “hold” and 5.3% say “sell.” On average, analysts have a 12-month price target of $94.06 for PM, which implies an upside potential of 21.6% from its stock price of $77.38.

Peer comparisons

Of the total 16 analysts who cover follow Altria Group (MO), 47.1% have a “buy” rating while 35.3% recommend a “hold” and 17.6% have a “sell” rating. On average, analysts have a 12-month price target of $58.73 for MO, which implies an upside potential of 22.5% from its stock price of $47.94.

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