Nomura Securities Maintains a 'Reduce' on Philip Morris (PM); Cutting Numbers

July 20, 2012 10:00 AM EDT
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Price: $94.57 +0.77%

Rating Summary:
    7 Buy, 11 Hold, 1 Sell

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    Up: 30 | Down: 30 | New: 23
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Nomura Securities maintains a 'Reduce' on Philip Morris (NYSE: PM) price target of $78.20.

Analyst, David Hayes, said, "We reduce our current-year EPS estimate by c.-0.5% to USD 5.16 (cons. USD 5.21; PY USD 4.85). We now assume organic volumes of +0.3% (prev. +0.1%; PY +0.5%); price/mix of +4.6% (prev. +5.2%; PY +8.7%); and margins of 44.8% (prev. 44.9%; PY 43.8%). Although Spain and Italy industry declines were as expected, we also saw a downturn in the quarter for France (industry -5.9% vs. -1.9% 1Q 12), and Germany (-4.2% vs. +3.1% 1Q 12). On a positive note for PMI, we saw Marlboro begin to gain some share momentum in 2Q 12. We raise our TP c. 7% to USD 78.2 from EUR 73.0 to reflect changes to our outer-year assumptions. At a 20% 2013 core P/E premium to peers, we still see this as expensive given reliance on Indonesia and the Philippines and the risk of slowdown in these markets into 2013."

For an analyst ratings summary and ratings history on Philip Morris click here. For more ratings news on Philip Morris click here.

Shares of Philip Morris closed at $89.55 yesterday.

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