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Altria Group Inc.
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PM CITI'S TAKE We resume coverage on PMI following a period of restriction. PM has completed the c.$16bn acquisition of Swedish Match. We estimate the transaction is c.+2% accretive to FY23E group EPS. The deal enhances the group’s strategic position in reduced-harm/next-generation products, with global leadership of both heated-tobacco (IQOS) and the Modern Oral/snus categories. Moreover, in time we believe PM will be able to leverage Swedish Match’s route-to-market in the US to roll-out its IQOS products. As a result, PM is on-track to reach its 2025 goal of deriving >50% of its revenues from smoke-free products (Citi 47%). However, with the likely removal of Russia weighing on headline EPS in FY23E and pro-forma valuations at c.5-year PE relative highs, we resume with a Neutral rating and a $109 target price. |
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