PMI’s guidance disappointed investors, but the company still has room for further growth.
This week, shares of Philip Morris fell after the company released its third-quarter earnings report. The tobacco company beat earnings estimates but lowered its guidance due to an ongoing dispute with the Russian government.
And while the company’s earnings beat Wall Street’s estimates, they still remained relatively flat from a year earlier. That’s mostly due to a large number of headwinds Philip Morris has dealt with in the past year.
However, it isn’t all bad news for the tobacco giant. The company does have a number of exciting initiatives it’s working on to boost revenue going forward. Listed below are three things you should know before investing in Philip Morris.
PMI is shifting away from the vaping industry
In August, Philip Morris announced it was in talks to merge with Altria, but then the potential deal was called off in September. And according to CNBC, this is partially due to Altria’s $12.8 billion investment in the vaping company Juul.
Juul is one of the largest e-cigarette companies in the U.S. and is currently subject to a number of lawsuits. As the public’s concern over vaping continues to grow, PMI is smart to shift its business away from e-cigarettes.
Philip Morris is launching new tobacco products
Philip Morris is best known for its cigarette brand Marlboro, though this hasn’t been helping the company in recent years. Cigarette sales continue to decline as consumers become more wary of the adverse health effects of smoking.
That’s why the company is launching a new iQOS device, which heats tobacco instead of burning it. The company has already launched the devices in Italy and Germany, and the FDA recently approved the iQOS device for sale in the U.S.
The company’s growth is accelerating
And finally, PMI’s heated tobacco devices give the company a lot more room to grow, even as cigarette sales continue to decline. And in many ways, the public’s fears over vaping could help the company sell more iQOS devices.
PMI’s sales of heated tobacco nearly doubled in 2019, and the company’s shipments rose as well. Going forward, the company expects that shipments of heated tobacco products could reach 100 million by 2021