Why Philip Morris stock fell today

stock Philip Morris International (afternoon -2.98%) The tobacco company tumbled today after missing final estimates in its fourth-quarter earnings report and providing guidance that was also off target.

As a result, the stock was down 2.6% at 1:44 PM on Thursday, after falling as much as 3.4% in early trading.

Image source: Getty Images.

Iqos ruined Philip Morris’ quarter.

Philip Morris has been working to transition to the next generation of Iqos heated products for a decade, but the results of that change were disappointing in the fourth quarter.

Heated tobacco (HTU) shipments increased only 6.1% in the quarter, well below the 11.6% increase for competing products. British American Tobacco Posted in Heating Appliances in the quarter, the latter recorded higher sales in that category, although Philip Morris posted 18% growth in the third quarter.

Overall, Marlboro seller Philip Morris reported a 0.5% decline in shipments for cigarettes and HTU, but organic sales rose 8.3% to $9.05 billion, well above estimates of $9.01 billion.

Lead-free products accounted for 39.3% of the business’ total revenue, and IQOS increased its market share in that market by 1.3 percentage points to 9.7%. Smoked tobacco revenue increased 5.3% due to a 9.9% increase in prices and a 1.9% decrease in shipments.

Bottom line, adjusted operating income increased 8% to $2.9 billion, and adjusted earnings per share (EPS) increased 12% to $1.36, but below the consensus of $1.45.

CEO Jacek Olczak said the company was well on its way to 2023, adding: “We are pleased that in the fourth quarter, smokeless products delivered nearly 40% of total net revenue and more than 40% of total profit. IQOS surpassed Marlboro in terms of net sales and became the leading premium nicotine brand less than 10 years after its launch. “We have solidified our position as a leader,” he said.

What’s next for Philip Morris?

For 2024, Philip Morris expects to have a solid year, with adjusted EPS of $6.30 to $6.44, or $6.43 to $6.55 on a currency-neutral basis, reflecting growth of 7% to 9%. However, both ranges are below the analyst consensus of $6.60.

Philip Morris also adjusted HTU growth to 14-16%, forecasting a recovery from the growth slowdown in the fourth quarter. With a strong dividend yield of 5.7%, today’s decline appears to be a buying opportunity for income investors.