The Philip Morris (PM) stock price is hovering near its highest level since 2018 as investors wait for its second-quarter earnings. They are also reacting to the recent wave of acquisitions as the company transitions from the tobacco market. The stock is trading at $98.90, which is about 76% above the lowest level this year.
Philip Morris earnings ahead
Philip Morris is a large tobacco company that is beloved by many investors because of its strong dividend yield. The company has a yield of 4.85% and has raised its payout every year since becoming a publicly traded firm in 2008. Still, the firm is criticized in some circles because of its smoking business that is blamed for causing illnesses like cancer.
Philip Morris will be in the spotlight this week as it publishes its quarterly earnings. Data compiled by Seeking Alpha shows that analysts expect that the firm will report revenue of more than $7.71 billion, up from the previous $7.58 billion. They also see the firm’s earnings per share falling from $1.57 in the first quarter to $1.55 in the second quarter.
Judging from its history, the company will likely release better-than-expected quarterly results. This is because it has beaten the consensus estimates in the past six quarters.
This strong growth will be due to the overall reopening of key markets, which likely led to more sales. In the first quarter, the company attributed its strong performance to higher shipments in the European Union and Russia. Notably, the firm also upgraded its estimates for the year, helped by its IQOS business. With global travel bouncing back, the firm will likely see more sales in duty-free shops.
Still, the firm warned that its business would be affected by the ongoing shortage of semiconductors used in its IQOS devices.
Philip Morris acquisitions
In the earnings call, analysts will likely question the company’s recent wave of acquisitions. Last week, the company said that it would acquire Vectura Group for $1.2 billion. Vectura Group is a company that offers thirteen inhaled and 11 non-inhaled products. It is also in clinical trials for several drugs.
The announcement came a week after the company said that it would acquire Fertin Pharma for more than $820 million. The company develops and manufactures several pharmaceutical and well-being products based on oral and intra-oral delivery systems. The goal of the acquisition is that the firm will learn more about the development of smoke-free products.
These moves come at a time when companies like Philip Morris, Altria, and British American Tobacco (BAT) have been shunned by several institutional investors.
So, is the Philip Morris stock a buy? Analysts have minimal optimism on the PM stock. The most recent estimate came from Morgan Stanley who boosted their rating to $110. Piper Sandler, Barclays, and JP Morgan analysts also expect the stock will rise to more than $105. These are modest ratings considering that the stock is trading at about $100.
Philip Morris stock analysis
The daily chart shows that the Philip Morris stock has been in a tight range recently. It has formed a narrow channel with the support and resistance levels at $97.55 and $100.88, respectively. The shares are also slightly above the 25-day and 50-day Moving Averages. It also seems like it has formed a bullish flag pattern.
Therefore, there is a possibility that the stock will drift upwards after it publishes the latest quarterly results.