Is Philip Morris stock a good buy in August 2021? | Invezz


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.

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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

Data source: tradingview.com

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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