Philip Morris (nyse: PM)

A

aresky

PHILIP MORRIS INTERNATIONAL INC. NYSE: PM

Target Price $68.00, Argus Recommendations Buy

• PM: Initiating coverage with BUY rating
• PM, which was recently spun off from Altria, is focused on rapidly growing international markets,
where regulation and litigation are laxer and demand for cigarettes is rising rather than falling.
• Our 12-month target price of $78, combined with the dividend yield

I n the second quarter of 2008, PM's net income rose nearly
23% year-over-year to $1.7 billion, and EPS rose to $0.84 from
$0.70 in the prior-year period.
R evenues grew 20.1% to $16.7 billion, and operating income
advanced 21.9% to $2.73 billion.
F o r the first half of 2008, earnings totaled $3.68 billion or
$1.75 per share, compared to $2.92 billion or $1.38 per share in
the first half of 2007. Revenues in the first half rose 18.7%
year-over-year to $32.3 billion, while operating income increased
25.0% to $5.55 billion.
During the second quarter, PM announced an agreement to buy
all the outstanding shares of Rothmans Inc. of Canada for CAD
$30 per share, for a total deal value of CAD $2 billion. Rothmans
Inc. has a 60% interest in Rothmans, Benson & Hedges Inc.
(RBH), which sells Benson & Hedges, Craven A, Mark Ten and
...

FINANCIAL STRENGTH & DIVIDEND
W e rate Phillip Morris' financial strength as High, the top of
our five-point scale. EBITDA covered interest expense by 35-times
in the second quarter; our 2008 EBITDA estimate represents a
coverage ratio of 35. PM's net debt/equity ratio was roughly 0.4 at
the close of the second quarter. Management expects to generate
over $11 billion in operating earnings and net earnings of more
than $7.5 billion in 2008, compared to long-term debt of about $6
billion.
P M operates in a resilient industry that is able to survive
economic downturns and remain highly profitable.
......September 16, 2008
The following report was produced by an independent research provider selected by an Independent Consultant as required under the Global Research Analyst Settlement and does not guarantee the accuracy, completeness, or timeliness of the following report.
 
My mom bought about 15k of Phillip Morris a few years ago for 39 bucks per share. It went up, spun off KFT then later split in two (MO, PM) Now all the stocks are worth a little more than 35k or so, but she holds it for the divy, cause i think she's getting about 1200 per year or so from all the divys.

My Moms friend bought it back in the 1950s. I believe she said she paid 100 dollars for the stock and then just held for the next 50 years. Before she died a few years ago, she was getting about 30k per year in divys and I think the stock was worth about 400k+

It was very strange...she was 90 years old and was always afraid she wouldnt have enough for "retirement' so every time she got a divy payment, most of it went into the bank. Every time she saved 100k dollars, she opened another bank account. By the time she died I think she probably had at least 600-700k in cash and in MO stock....all from a 100 dollar investment. Too bad she didnt get to enjoy that money.
 
Analyst: Philip Morris Int'l to post 'solid' gain
October 7, 2008 2:44 PM ET
NEW YORK (AP) - A Barclays Capital analyst said Tuesday he expected Philip Morris International, seller of Marlboro cigarettes overseas, to post better-than-expected third-quarter results.

"While we have seen some recent strength in the U.S. dollar and early indications for a global macro slowdown taking hold, we believe PM will continue to post solid 3Q results driven by pricing and considerable contribution from currency," analyst Michael Branca wrote in a note to investors.

Branca said he expected a modest volume increase of 1.5 percent worldwide. He said markets in Eastern Europe, the Middle East, Africa, Asia and Latin America to be particularly strong while sales volume in the European Union may fall by about 1.7 percent.

Philip Morris International Inc. — which has offices in Lausanne, Switzerland, and New York — was spun off from Altria Group Inc. in March. Altria still owns Philip Morris USA, which has headquarters in Richmond, Va. Branca said cost cuts after the spin-off may boost operating profit margins at the international business.

He forecast a quarterly profit of 91 cents per share. Analysts polled by Thomson Reuters expect third-quarter earnings of 90 cents per share and revenue of $6.58 billion, on average.

Branca rates the company "Overweight" with a $59 price target.

Philip Morris is scheduled to report its third-quarter results on Oct. 22.

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20081007&ID=9239406&Symbol=PM
 
Philip Morris (PM) Tops Q3 View By 3c; Philip Morris Guides Slightly Higher

October 22, 2008

Philip Morris (NYSE: PM) reports Q3 EPS of $0.93, 3 cents better than the analyst estimate of $0.90. Revenues for the quarter were $6.95 billion, versus the consensus of $6.57 billion.

Phillip Morris sees FY08 EPS between $3.32 to $3.38 versus consensus of $3.33.

http://www.streetinsider.com/Earnin...ip+Morris+Guides+Slightly+Higher/4085158.html

October 22, 2008 11:26 AM ET
Philip Morris International (PM ), the makers of such tobacco brands as Marlboro, Philip Morris, and Parliament, posted better-than-expected results earlier this morning. Moreover, the company's growth remains robust, leading it to reaffirm its outlook for 2008.

Analysts were expecting earnings to come in at $0.90 per share, but the big tobacco company generated $0.93 per share during the third quarter. That was up 19% from the prior year.

Earnings per share growth followed in the wake of strong revenue growth and share repurchases. Revenue was up nearly 18% year-over-year to $6.95 billion, exceeding analysts' consensus estimate of $6.57 billion, while $2.4 billion was spent on repurchasing almost 49 million shares of outstanding stock during the quarter.

In addition to share buybacks, management is returning additional cash to shareholders via increased dividends. The company announced that its quarterly dividend will now total $0.54 per share, up 17% from the inaugural regular quarterly dividend. As previously indicated, PMI has a dividend policy that anticipates a payout ratio of roughly 65%.

PMI was spun off from Altria Group (MO 19.63, +0.25) when it was decided to divide the relatively stagnant domestic business and the growing international business. In turn, PMI's largest market is the European Union. The EU delivered 17% sales growth and 15% operating income growth. The most robust growth was seen in Eastern Europe, Middle East, and Africa, which collectively posted 24% revenue growth and 33% operating income growth.

With all of PMI's operations based outside of the U.S., growth has been helped by favorable currency translation rates. However, with the dollar showing strength against a basket of major currencies, the benefit of currency translation rates is likely to be limited going forward. That makes organic growth all the more important. While PMI saw overall volume increase 4% from the prior year, it slipped 2% in its key European Union market.

Philip Morris remains confident it will hit its full year outlook. The company currently anticipates adjusted earnings will range from $3.32 to $3.38 per share. That represents year-over-year growth of roughly 19% to 21% from a revised pro forma adjusted base. Analysts expect the company to earn $3.33 per share.

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=Bcom&Date=20081022&ID=9308178&Symbol=PM
 
North America - United States
Tobacco (GICS) - Tobacco (Citi)
Citigroup Global Markets ðD Equity Research

22 October 2008 - 8 pages

Philip Morris International (PM)
3Q08 1st Thoughts: Strong results

Buy/Medium Risk 1M
Target price US$57.00

 Underlying 3Q08 results better than consensus — Underlying EPS was $0.93,
(vs Citi at $0.88 and consensus at $0.90). Adjusted Operating Co. Income
(OCI) was +17.5%, or +7.2% excluding currency and acquisitions. This was
significantly better than our expectations, with the beat mainly in Eastern
Europe but Asia and EU were also stronger than our forecasts. Sales were
better than expected in all regions.

Strength in Eastern Europe, Asia offset temporary weakness in Czech, Japan —
The results were exceptionally strong in Eastern Europe (+25% adjusted OCI
excluding currency), and Asia (+8%). Eastern Europe was strong due to
uptrading to premium brands in Russia, Ukraine and Turkey.
 Buybacks more aggressive than expected — PMI spent $2.4 bln (vs. Citi
forecast of $2.1 bln) in 3Q buying 44.8 mln shares. This is more than
expected, and brings the total shares bought back since May to 86.2 mln, or
$4.5 bil. This larger-than-expected buyback is a bullish development in our
view.

......

Valuation
Our price target is $57 and represents the average of what we consider to be
fair values on P/Es ($59.5), FCF yields ($57), and EV/EBITDA ($54). We put a
50% weight on our P/E-based valuation and 25% on each of the other two
methodologies.
-- On P/Es, PMI trades at a discount to other global consumer stocks like P&G,
Coca-Cola and Pepsi, even though we expect PMI to have higher EPS growth.
We think it is reasonable to suppose that in the next 12 months, one third of
the gap in multiples will close. If normal market conditions return, this would
suggest a forward multiple should return to at least 15x. In 12 months' time,
this will be applied to 2010E EPS. Given our $3.97 estimate for 2010 EPS, this
implies fair value of $59.5.
-- On FCF yields, our estimate of fair value in 12 months is $57. This assumes
the yield moves from its current very high level to about 7.0%. Given current
interest rates, this seems very attractive to us.
-- Our estimate of fair value on EV/EBITDA ($54) assumes the current multipleincreases to 9.5x.
 
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