Stifel analyst Matthew E. Smith reiterated a Buy rating on Philip Morris International Inc (NYSE:PM), raising the price forecast to $145 from $138.

Yesterday, the Marlboro maker reported third-quarter revenue of $9.91 billion, up 8.4% year over year, beating the consensus of $9.69 billion.

Smith writes that growth in smoke-free products is driving both organic revenue growth and margin expansion.

Net revenues increased by 11.6% on an organic basis, mainly reflecting a favorable pricing variance, primarily due to higher combustible tobacco pricing, and a favorable volume/mix, mainly driven by higher smoke-free product volume.

Per Smith, there is a strong argument for owning the stock, thanks to the impressive and accelerating growth of IQOS and ZYN brands, which supports robust long-term business expansion.

The analyst highlighted that market share is growing steadily in important regions like Japan and Europe, with Europe's share hitting 9.5% this quarter.

Also Read: Marlboro Maker Philip Morris Highlights Strong Q3 Performance On Higher Prices, Issues Upbeat Annual Forecast

Most of the flavor bans in Europe are now in place, and Smith adds that the rebound in in-market sales (IMS) and market share shows promising growth potential for IQOS in the region.

Philip Morris has raised the low end of its U.S. ZYN volume outlook for 2024, now expecting 570 to 580 million cans, which is an increase of 10 million at the low end. The analyst estimates a total of 579 million cans, reflecting over 50% growth.

For 2025, the analyst estimates 9.5% EPS growth, driven by 8% organic revenue growth and margin expansion from smoke-free products.

This includes a 10% increase in organic operating profit, supported by volume growth and over 7 percentage points from price/mix contributions.

Price Action: PM shares are trading lower by 0.36% to $130.94 at last check Wednesday.

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