Jeffries....brief clip from a 105-page PDF....
PM: Upgrade to Buy; Leading the shift to the new model
We upgrade PM to Buy, new PT USD118, as we also now capture the contribution from the SM deal. Expected 12-month TSR is shown in Exhibit 2.
On a longer-term basis, we have consistently been constructive on PM because it is leading the shift over to the tobacco model of the future, both RRP and Beyond Nicotine. On the former, it is the global leader, with estimated RRP share of 23%, compared to 21% share in combustibles.
Our previous near-term caution on PM had been based on an assumption of an unfavorable European Tobacco Tax Directive (EU TTD) for RRP taxes, and then PM's lack of current RRP exposure to US, and potential share and cost implications around this.
We have now changed our outlook in both of these areas.
