Philip Morris Intl. Stock Can Puff To $98

Free tobacco and cigarettes article: www.freetobacco.info

One of the biggest concerns facing investors regarding the tobacco companies is falling cigarette consumption, and so they hence are skeptical to assign much if any growth to these companies. A closer look at Philip Morris International however points to a robust economic model and sound cash flow generating ability. The stock has climbed more than 12% in 2012 so far, and we believe there is more to come. Philip Morris International competes with tobacco majors like British America Tobacco and Imperial Tobacco Group, among others. We have a $98.70 price estimate for Philip Morris International, which is about 10% higher than the market price.
  Strategy for Europe

 Tobacco companies have been raising the prices of cigarettes periodically in Europe to make up for the declining volumes. It’s easy to justify the price increases by blaming the governments and rising input costs. Moreover, the company doesn’t necessarily lose from declining cigarette volumes. Since the value of excise taxes are fixed for a pack of cigarettes (rather than a percentage of selling price), raising the selling prices increases the net revenue per cigarette pack (i.e. revenue – excise taxes) for the company. Besides, declining cigarette volumes could not stop the company from posting growth in overall net revenues. In 2011, the net revenues for the European region grew 4.6% to $9.2 billion. Even in Q1 2012, net revenues rose 2.5% y-0-y.
  Asian Markets Carry Growth

Unlike in Europe, demand for cigarettes in other Asian countries is actually showing positive growth buoyed by rising incomes and cigarettes as an integral part of people’s lifestyle. Some of the biggest markets for the company outside Europe are Indonesia, Japan and South Korea. In 2011, Asia displaced Europe as the biggest revenue contributing region.