Here's Why Philip Morris Raises Its 2025 EPS Guidance Again

Philip Morris International PM once again raised its 2025 earnings per share (EPS) guidance following a strong second-quarter performance, driven largely by the continued profitability of the smoke-free portfolio. The company expects an adjusted EPS of $7.43-$7.56, up from the prior stated $7.36-$7.49, indicating 13-15% year-over-year growth.

In the second quarter of 2025, smoke-free net revenues rose 15.2% year over year, while gross profit for the segment jumped more than 23%. This higher-margin portfolio now contributes 41% to Philip Morris’ total net revenues and 42% to gross profit, marking it as a key driver of earnings momentum.

Growth was broad-based across the company’s multi-category smoke-free platform. IQOS delivered a solid quarter, with adjusted in-market sales of heated tobacco units rising 11.4%, supported by global expansion and recovery in Europe’s markets like Italy. ZYN also posted a strong rebound, with U.S. consumer offtake up 26% in the quarter and 36% in June, driven by improved in-store availability and renewed commercial activity.

Importantly, PM delivered 16.1% adjusted operating income growth in the quarter, significantly outpacing revenue gains. This performance reflects a combination of strong pricing, improved scale efficiencies and a favorable category mix, particularly the shift toward higher-margin smoke-free products. 

The raised guidance indicates management’s confidence that the recent acceleration in smoke-free category growth is sustainable. It signals a belief that the company’s multi-category strategy is gaining traction more quickly than anticipated, supported by strengthening demand.

Philip Morris & Competitor’s Smoke-Free Strategies

Both Altria Group, Inc. MO and Turning Point Brands, Inc. TPB are actively expanding their smoke-free portfolios, though with different scales and specific focuses. 
Altria's primary driver in this segment is its "on!" nicotine pouch brand, which saw an 18% increase in shipment volume to more than 39 million cans in the first quarter of 2025, expanding the share of the oral tobacco category to 8.8%. To support long-term growth in the modern oral segment, Altria continues to invest in distribution and awareness.

In contrast, Turning Point Brands is demonstrating aggressive growth in its modern oral nicotine pouch sales (FRE and ALP), which increased nearly tenfold year over year in the first quarter of 2025, contributing $22.3 million in revenues. TPB has significantly raised its full-year nicotine pouch sales guidance to a range of $80 million to $95 million. Turning Point Brands is making substantial investments in sales, marketing and potential U.S. manufacturing for its white pouch brands to achieve a significant market share in a category projected to exceed $5 billion.

PM’s Price Performance, Valuation & Estimates

Shares of Philip Morris have lost 10.2% in the past month compared with the industry’s decline of 2.2%.

From a valuation standpoint, PM trades at a forward price-to-earnings ratio of 20.16X, up from the industry’s average of 14.67X.

The Zacks Consensus Estimate for PM’s 2025 and 2026 earnings implies year-over-year growth of 14.2% and 11.9%, respectively.

Philip Morris currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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