The Point for North America

Research evidence excerpt

The Point for North America

certainly stands out as best-positioned given their revenue mix profile is better

geared for the capital markets theme. Visibility feels relatively better on Banking

revenues driven by strong backlogs, AI investment cycle, and constructive mgmt

commentary. While trading revenue pools are modestly above historical averages

and at some point likely revert back to more "normal" levels, we believe this is more

of a med-term consideration and feels hard to discount the near-term outlook

given the favorable environment and continued wallet-share gains. Our estimates

move higher almost entirely on stronger trading revenues and we raise our TP to

$1,200 on a higher normalized ROTCE assumption of 18.5%.

Benjamin Gerlinger

Vs. Consensus

Philip Morris International (PM.N) - Q2 beat unlikely but upside to FY26E

estimates remains. Valuation means we prefer BAT into earnings season.

With IQOS and ZYN growth hampered by technical factors, a big Q2 organic beat is

unlikely, in our view. Our Q2 organic OCI at +4.0% is slightly below consensus.

Against this backdrop, and with the roll-out of ZYN Ultra only just beginning, we

expect management to reiterate FY26E guidance metrics with its July 22nd Q2

results. Nevertheless, with OSG/EBIT growth likely to accelerate in Q3 – aided by

Japan inventory build/easy US ZYN promo comps – the risk to FY26E estimates is

still skewed to the upside, while a PMTA approval for IQOS Iluma in the US could

drive further PE multiple expansion. Despite this, given PM has been one of the

best performing Staples stocks YTD (+12%) and is trading at the upper end of its

recent PE relative range vs. BATS the shares may pause into the print. We maintain

our Buy rating and reiterate our near-term preference for BAT.

Simon Hales