Shares of Philip Morris Worldwide (PM -3.08%) had been sliding at the moment after the tobacco firm missed estimates on the underside line in its fourth-quarter earnings report and supplied steering that additionally missed the mark.
Consequently, the inventory was down 2.6% at 1:44 p.m. Thursday after buying and selling as far down as 3.4% earlier within the session.
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Iqos spoils Philip Morris’ quarter
Philip Morris has spent a lot of the previous decade attempting to pivot to its next-gen Iqos heat-not-burn product, however outcomes from that transformation had been disappointing within the fourth quarter.
Shipments of heated tobacco items (HTUs) had been up simply 6.1% within the quarter, properly beneath the 11.6% progress that rival British American Tobacco posted in heated items in its quarter, and the 18% progress that Philip Morris delivered within the third quarter, although the latter has larger quantity within the class.
General, Philip Morris, the vendor of Marlboro, reported that shipments throughout cigarettes and HTUs had been down 0.5%, although natural income jumped 8.3% to $9.05 billion, which edged out estimates at $9.01 billion.
Smoke-free merchandise accounted for 39.3% of whole income within the enterprise, and Iqos gained 1.3 proportion factors of market share in its markets the place it is out there, reaching 9.7%. Income for smokable tobacco income rose 5.3% as a consequence of a 9.9% improve in value and a 1.9% decline in shipments.
On the underside line, adjusted working earnings rose 8% to $2.9 billion, driving adjusted earnings per share (EPS) up 12% to $1.36, however that was in need of the consensus at $1.45.
CEO Jacek Olczak stated the corporate delivered a robust end to 2023 and added: “We’re happy that smoke-free merchandise reached practically 40% of our whole web revenues and over 40% of our gross revenue within the fourth quarter. This was led by the continued progress of Iqos, which has now surpassed Marlboro by way of web revenues, confirming its place because the main premium nicotine model lower than 10 years from launch.”
What’s subsequent for Philip Morris?
For 2024, Philip Morris sees one other strong 12 months, with adjusted EPS anticipated to hit $6.30 to $6.44, or $6.43 to $6.55 on a currency-neutral foundation, reflecting 7% to 9% progress. However each ranges are beneath the analyst consensus at $6.60.
Philip Morris additionally forecast adjusted 14% to 16% progress in HTUs, indicating it could get better from the gradual progress within the fourth quarter. With a robust dividend yield at 5.7%, at the moment’s pullback seems like a shopping for alternative for earnings buyers.
Jeremy Bowman has no place in any of the shares talked about. The Motley Idiot recommends British American Tobacco P.l.c. and Philip Morris Worldwide and recommends the next choices: lengthy January 2026 $40 calls on British American Tobacco P.l.c. and quick January 2026 $40 places on British American Tobacco P.l.c. The Motley Idiot has a disclosure coverage.
