2Q26 US nicotine preview

Research evidence excerpt

2Q26 US nicotine preview

ce International PM $183.09 B-1-7

July 2017, when the FDA unveiled its more aggressive nicotine regulatory framework. Source: BofA Global Research, Bloomberg

While we continue to see structural challenges facing the U.S. nicotine industry, we BofA GLOBAL RESEARCH

believe a more favorable regulatory environment under the current administration should

continue to support positive stock performance. FDA= Food & Drug Administration

Philip Morris Int’l: Modest EPS changes, $209 PO (unchg) PMTA = premarket tobacco application MRTP = modified risk tobacco product

We expect US ZYN results to remain a key focus for investors again this quarter and VA= Visible Alpha

would look for additional color from management on the progress of its ZYN Ultra PO= price objective

launch and possible upcoming innovation. For 2Q26, we forecast EPS of $2.04,

including a $0.04 FX headwind. (2Q FX includes unrealized transactional FX from

deferred tax liabilities associated with the strengthening Russian ruble, with the full 5c

reduction expected to occur in 2Q.) Our 2Q EPS estimate is below Bloomberg

($2.07)/VA consensus ($2.05), but above mgmt's guidance of $1.97–$2.02. For 2026,

our EPS estimate is $8.40 (unchg) but we raise our 2027 EPS by $0.02 to $9.15. Our

forecasts incorporate FX impact of +$0.15/-$0.07 vs our prior assumptions of +$0.20/-

$0.03. Bloomberg/VA currently forecast 2026 EPS of $8.40/$8.42, while 2027 consensus

is $9.18/$9.16. Our $209 PO is based on a 22.8x (-10 bps vs. previous) multiple applied

to our 2027 EPS of $9.15. This values PM at a 35–40% premium to its avg P/E of 16.3x

since July 2017, when the FDA shifted its nicotine regulatory strategy. Although PM's

valuation multiple has expanded and now trades closer to large-cap consumer staples