UPDATE: Cowen Upgrades Philip Morris (PM) to Outperform as Performance Gets Back on Track
Cowen upgraded Philip Morris (NYSE: PM) from Market Perform to Outperform with a price target of $97.00 (from $78.00). The change follows Q1 results and guidance. Analyst Vivien Azer pointed to signs of an inflection, as the company gets back on track to delivering against their long-term targets.
"Notably, while results have been challenged by a tough macro and industry backdrop, as well as adverse currency headwinds, improved volumes and price realization look to be driving improvement in PM's underlying results. While currency headwinds will persist, and could drive incremental negative earnings revisions, we are encouraged that on an underlying basis, PM is getting back on track to delivering against their long-term targets," said Azer.
"Also, we like very much PM's opportunity going forward in terms of Heat-Not-Burn products as the company is set to launch nationally in select countries in 2015," added the analyst.
Regarding estimates, Azer said, "For 2015, we now look for EPS of $4.38 (up from $4.21). For 2016, we raise our EPS to $4.84 (up from $4.58). As well, given these better results, we are also raising our target valuation on the stock. While we had ascribed a 17x target multiple to PM, given the improvement we expect to continue to see, we believe PM should once again trade at a premium to its U.S. peers. With the group trading at 18x, we believe PM should trade at 20x FY16 EPS."
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 $78.13 yesterday.