PMI Projects Strong 2026 Profit Amid Zyn Concerns

PMI Forecasts Strong 2026 Profit Despite Market Jitters

Philip Morris International (PMI) has projected a higher-than-expected adjusted earnings per share for 2026, forecasting a range of $8.38 to $8.53, which surpasses the analyst consensus of $8.33. The company also anticipates adjusted earnings growth of 11.1% to 13.1% for the current year. Despite this positive outlook, the company's shares declined by 2.9% in pre-market trading, reflecting investor unease.

Zyn Competition and Market Share Concerns

The optimistic forecast is largely driven by the performance of smoke-free products, particularly the Zyn nicotine pouch. However, the brand faces escalating competition from rivals such as British American Tobacco, which is capturing a larger portion of category growth. This has fueled concerns regarding Zyn's long-term momentum, even as its U.S. volumes grew by 19% in the fourth quarter, supported by significant commercial activities.

Investor Sentiment and Financial Performance

Investor apprehension stems from PMI's strategy of using costly promotions to protect Zyn's market share, raising questions about profitability. An analyst from Bernstein noted that PMI's fourth-quarter results were mixed, with slightly lower revenues and a notable lack of specific guidance on U.S. Zyn growth. This absence of clear data is viewed negatively, intensifying fears of ongoing market share loss to competitors.

Outlook on Smoke-Free Investments

PMI plans to invest up to $1.6 billion to support the growth of its newer products, including Zyn and the heated tobacco device IQOS. This investment is critical as the company transitions away from traditional cigarettes. While the long-term financial targets appear robust, near-term market sentiment will likely depend on PMI's ability to maintain Zyn's market leadership profitably.

FAQ

Q: Why did Philip Morris shares fall despite a strong profit forecast?
A: Shares fell due to investor concerns over intense competition for its Zyn nicotine pouch brand and the company's lack of specific growth guidance for the product in the U.S.

Q: What is PMI's adjusted earnings forecast for 2026?
A: The company forecasts full-year adjusted earnings per share to be between $8.38 and $8.53, which is above analysts' estimates.

Source: Investing.com