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Philip Morris International Inc. (PM) Price Target Bumped to $101 at Jefferies: Here’s Why

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The company has excellent long term growth prospects, including best positioning in vapor, according to Jefferies

Philip Morris International Inc. (NYSE:PM) was maintained at Hold by Jefferies analyst Owen Bennett. However, he raised price target by approximately 2% from $99 to $101 to reflect positive momentum. The analyst also increased the estimates for the company. Philip Morris shares are currently trading in green, increasing 0.77% in the market.

Mr. Owen Bennett commented that the company owns exceptional long term growth prospects. It could be best positioned in vapor in the longer term. Thus, increase in price target would reflect positive momentum generated from its growth prospects.

However, Bennett believes that the near term growth expectations may have gotten ahead of themselves. The near term multiple could be pressurized on the back of disappointing risk associated with fiscal year 2017 growth as the firm sees increasing pressure for core cigarette business. The multiple could also be negatively impacted by its recognition as being most expensive across the industry and rising vapor competition.

Nonetheless, it is important to note that the New York-based company has done outstandingly well since the beginning of the year. Shares have risen roughly 9.6% year-to-date through Friday. The firm also raised its estimates for FY16 and FY17 earnings per share (EPS), reflecting long term optimism. FY16 EPS estimate inched up three cents from $4.94 to $4.97. On the other hand, FY17 EPS increased by six cents from $5.32 to $5.38.

Whilst Jefferies reiterated the shares at Hold, other firms have suggested higher ratings. Earlier this month, Goldman Sachs maintained it at Buy with a PT of $116. Also, Wells Fargo & Co. reiterated it at Outperform, with a price target of $115, back in September.

Street analysts have given it a 12-month median price target of $105.65, indicating its upside potential of about 9.7%. Out of 22 analysts, nine gave Buy ratings, whereas one rated Overweight, 11 advocated Hold, and one advised to Sell.

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