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Nomura Sees 15% Downside for Philip Morris International; EU Exposure a Big Risk (PM)

By Dividend.com,  June 22, 2012, 09:43:50 AM EDT

Tobacco giant Philip Morris International Inc. ( PM ) on Friday caught some bearish commentary from analysts at Nomura Securities.

The firm maintained its "Reduce" rating on PM as well as its $73 price target, which suggests a 15% downside to the stock's Thursday closing price of $85.60.

A Nomura analyst commented, "The company took the opportunity to update FY12 earnings guidance for recent FX moves. A cut of 10 cents takes the range to $5.10-$5.20 (LY 4.85). NE currently at $5.25. This should not be a surprise to the market. While Asia and EMEA contribution YTD is ahead of expectations, the EU region performance remains tough, with a further step down in trends in Southern Europe in 2Q. PMI provided a rich level of data and detail on the performance and strategy and developing options for the company. However, the company does hold a premium valuation (15.5x 2013E PE and 11.1x EV/EBITDA (13E). For now the 34% reliance on EU for group profit, and the risks of Asian coming off the boil for a period, make us wary."

Philip Morris International shares posted modest gains in Friday morning trading.

The Bottom Line
Shares of Phillip Morris International ( PM ) have a 3.60% dividend yield, based on last night's closing stock price of $85.60. The stock has technical support in the $82 price area. The stock is trading near the all-time high range of $89-$91 a share.

Philip Morris International Inc. ( PM ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Stocks

Referenced Stocks: PM



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