While Philip Morris International Inc (PM) stock has performed more impressively compared to tobacco rival peer Altria Group (MO) in the last 10 years, that strong run has taken on a new turn Monday, as investors are not quite sure if a merger between the two firms would be a great idea, Wells Fargo disclosed.
Shares of Philip Morris fell in after-hours sessions on Monday, before ending below 4.1 percent. While no one from Wall Street could say what really happened, rumors circulated that a sell-off was sparked by reports about the two companies joining forces.
Analyst Bonnie Herzog said that while they have not heard any specific update to explain the stock movement, the company believes it is connected with renewed speculations about a Philip Morris-Altria combination - a position Altria first made in 2016. "Also, we find it curious that Philip Morris recently said they will no longer present at the Barclays consumer conference next week," Herzog pointed out.
Shares of Altria remained in the green zone until late Monday, after a brisk opening bell. Interestingly, news about the merger was subdued, and while speculations have been on the air for years, Altria's attraction in smoke-free cigarette brand iQOS provides a new twist.
Philip Morris is up almost 18 percent year to date, just prior to the S&P 500, while Altria has shed almost 5 percent in the same period. Philip Morris shares moved with (minus) 9.75 percent from its 50-day peak and distanced at 7.45 percent from a 50-day low. Analyses rating for Philip Morris stands at 2.1. For the next four quarters, the average individual price target projections cover a sell-side of $96.22.
Among the leading cigarette makers, Altria has also widened its brand name beyond conventional cigarettes. And that makes Altria Group's shares worth a new look, Morgan Stanley bared in a note on Friday. Philip Morris revealed a shift of (minus) 2.08 percent lifting its price on $81.21/share in its last session, Friday.
The latest trade movement highlighted a stock price of 25.60 percent off from its 52-week low and traded with (minus) 12.41 percent from a peak hit in the last 52-week period. Philip Morris maintained 1.5 million floating stocks and holds 1.6 million outstanding shares.
Philip Morris' earnings per share indicate growth of 3.91 percent in the first four quarters of the year and seen to hit high earnings growth for 2020 at 7.96 percent. Wall Street expects its EPS growth in the next five years to hit 5.70 percent. PM's EPS growth rate in the last five years was (minus) 0.61 percent.
Meanwhile, it's normal for some investors to believe that the general market pulse is not in favor of Philip Morris, all because it is not transparent enough in its efforts to entice people to shun conventional cigarettes and patronize their smokeless product. Research has found that a big number of smoke-free tobacco products are not as safe as advertisements say they are.