By Philip Morris International stock has experienced a lukewarm beginning to 2024, but the upcoming fourth-quarter earnings report on Feb. 8 could potentially spark a turnaround.
While the Consumer Staples Select Sector SPDR exchange-traded fund has risen by 3.1% since the start of the year, Philip Morris shares have struggled, falling 1.1%. Various factors can be attributed to this underperformance. Concerns about shipments and costs have arisen due to Red Sea attacks by Houthi rebels, and the stronger dollar poses a potential threat to sales, as the majority of Philip Morris’ revenue comes from outside the U.S.
However, it seems that the stock is gradually stabilizing around the low $90 range, a level of support observed consistently over the past few years. The upcoming earnings report may serve as the catalyst that propels the shares upwards. Analysts predict a 10.5% growth in sales for the quarter, amounting to $9 billion, as reported by FactSet. This optimistic outlook can be attributed to the increasing acceptance of Philip Morris’ smokeless products, such as their popular iQOS heated tobacco, compensating for the decline in traditional cigarette sales.
The iQOS product line, in particular, has been performing exceptionally well. The global demand for smokeless tobacco products is growing at an annual rate of nearly 5%, projected to reach $124 billion by 2029, according to Mordor Intelligence. During the third quarter, iQOS shipments experienced an impressive 18% growth rate. Additionally, due to higher pricing, the switch from traditional cigarettes to iQOS translates into increased sales revenue.
Philip Morris International stock may be on the verge of a rebound. The upcoming earnings report is pivotal to determining the future trajectory of the shares. With a projected 10.5% increase in sales and the continued success of their smokeless products, there is optimism surrounding the company’s ability to navigate challenges and regain its momentum.
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