Philip Morris International Inc. (NYSE: PM) shares have weakened from their recent highs above $100, and the current price stands around $96. Philip Morris reported its second-quarter results yesterday and further raised the outlook for the 2021 fiscal year.
Fundamental analysis: Philip Morris raised the outlook for the 2021 fiscal year
Philip Morris reported its second-quarter results this week; total revenue has increased by 14.1% Y/Y to $7.59 billion, while the GAAP EPS was $1.39 (misses by $0.09). Total revenue has increased below the expectations (- $120 million), but the company’s management expects the accelerating trends in the upcoming quarters.
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“Our business delivered a very strong performance in the second quarter of 2021, coming slightly ahead of our expectations to match Q1’s record high quarterly adjusted diluted EPS of $1.57 despite the continued challenges of the global pandemic. Most impressive was the continued strong growth of IQOS, which made up 13% of our volumes and nearly 30% of our adjusted net revenues compared to 24% in the prior-year quarter,†said Emmanuel Babeau, Chief Financial Officer of Philip Morris.
Philip Morris expects organic revenue growth in the range between 6% to 7% vs. prior outlook of 5% to 7%, while the adjusted EPS should be around $6 for the same period (2021 fiscal year). Philip Morris announced the acquisition of Vectura Group for an enterprise value of $1.2 billion, which will position it to expand capabilities in innovative inhaled and oral product formulations.
The transaction is expected to close in the upcoming months, but it is also important to mention that Philip Morris announced a plan to acquire Fertin Pharma, a manufacturer of products based on oral and intra-oral delivery systems.
Philip Morris began the third quarter in a strong position; still, the Delta variant of the coronavirus continues to pose downside risks. The battle against the coronavirus is still not over, and if the U.S. stock market enters a more significant correction phase, the share price could be at lower levels.
Fundamentally looking, Philip Morris trades at less than eleven times TTM EBITDA, and with a market capitalization of $147 billion, shares of this company are fairly valued. Philip Morris’s 5% dividend looks safe, and the company’s management remains very optimistic about the upcoming quarters in terms of growth which is certainly positive for shareholders.
Technical analysis: $100 represents the current resistance level
Rising above $100 supports the continuation of the bullish trend, and the next price target could be located around $110. On the other side, if the price falls below $90, it would be a strong “sell†signal, and we have the open way to $85 or even $80.
Summary
Philip Morris reported its second-quarter results yesterday and further raised the outlook for the 2021 fiscal year. Philip Morris shares are fairly valued, but if the U.S. stock market enters a more significant correction phase, the share price could be at lower levels.
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