Philip Morris, the Best is Yet to Come: Wells Fargo

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Philip Morris, the Best is Yet to Come: Wells Fargo
The analysts foresee faster consumption uptake and conversion potential from the new rollout, given
established consumer awareness of the brand caused by “the halo effect from Platform 1.”
“Once commercialized, we believe Platform 2 has the potential to accelerate PM’s transformational growth as it continues to implement a total
portfolio approach toward premiumizing its overall offerings—something we believe the market continues to underappreciate,” wrote Herzog
Analysts say preliminary analysis suggests Platform 2 could “increase PM’s fundamental value by an incremental $22/sh (on top of the $35/sh
for Platform 1) of which only 30% is reflected in PM’s current valuation.” (See also: Tobacco Industry Earnings Reverse Winning Streak
Analysts led by Bonnie Herzog at Wells Fargo are bullish on the second wave of the Marlboro maker’s new smoke-free
iQOS product, seeing room for more upside in PM shares after already gaining nearly 35% year-to-date (YTD).
At the center of the New York City-based firm’s ambitious growth plan is its branded heat-not-burn tobacco product called iQOS, which is currently under review by the Food
and Drug Administration (FDA) to be marketed as a “reduced risk” product.


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