Philip Morris International’s (PMI) stock has fallen roughly 7% since its July 22 release of second-quarter 2025 financials, sliding from near $176 to about $164 today.
The decline reflects investor disappointment over the company’s $10.14 billion revenue falling short of the $10.33 billion consensus, with ZYN nicotine pouch shipments underperforming.
Despite the revenue miss, the company delivered stronger-than-expected earnings, with adjusted EPS of $1.91 vs. $1.86 anticipated. Adjusted operating income grew 14.9% organically, driven by robust price execution and a rapidly expanding smoke-free portfolio.
CEO Jacek Olczak underscored the performance, stating the quarter’s results “reflect excellent momentum in our multicategory smoke‑free business, with a reacceleration of IQOS adjusted in‑market sales growth and ZYN U.S. offtake growth, coupled with combustibles resilience.”
The company accordingly raised its full‑year adjusted EPS guidance to a range of $7.43–$7.56 from a prior $7.36–$7.49.
Smoke‑free products now represent a significant portion of PMI’s business—41% of total revenue and 42% of gross profit—with offerings available in 97 markets and nearly half offering at least two flagship brands (IQOS, ZYN, and VEEV).
In the vapor category, VEEV continued its increasingly profitable growth, and is now available in 42 markets. Shipment volumes more than doubled, driven by Europe. Within the closed pods segment, VEEV holds the No. 1 position in 6 European markets, including Greece and Italy.
On the combustible front, Marlboro continues to perform well. Net revenue rose 2.1% year-over-year due to pricing strength, though the company noted cigarette volume losses persist. Marlboro achieved its strongest global market share since the firm spun off in 2008.
Going forward, PMI anticipates a roughly 2% decline in cigarette volumes for the full year, expected to be offset by double-digit growth in smoke-free shipments. With operating cash flow projected at approximately $11.5 billion, PMI is well-positioned to continue investing in its next-generation nicotine brands.
The 7% stock drop since earnings reflects investor focus on near-term revenue headwinds and ZYN shipment delays, but analysts remain largely upbeat. Stifel reiterated a Hold rating with a $192 target, noting solid EPS and operating performance. Goldman Sachs and Citi both raised their targets to $200.
