Philip Morris Beats Earnings Expectations. The Stock Is Falling Anyway.

The tobacco company beats analysts’ earnings expectations, but guidance disappoints. (Fabrice Coffrini/AFP via Getty Images)

Key Points

• Philip Morris International’s third-quarter adjusted earnings of $2.24 per share and revenue of $10.8 billion exceeded Wall Street expectations.
• The smoke-free business, including Zyn and Iqos, generated 41% of total revenue, a 2.9 percentage-point increase from the previous year.
• The company raised the lower end of its full-year 2025 adjusted earnings per share guidance to between $7.46 and $7.56.

Shares of Philip Morris International fell sharply Tuesday even after the tobacco company beat quarterly earnings expectations

Philip Morris posted adjusted earnings of $2.24 a share for the third quarter, ahead of Wall Street’s consensus call for $2.09. Revenue totaled $10.8 billion, above analysts’ estimate of $10.6 billion and up 5.9% on an organic basis from the prior year.

Shares dived 7.1% Tuesday after moving higher in premarket trading. The stock had gained 31% this year as of Monday’s close.

Philip Morris reported another solid quarter for its smoke-free business, which includes Zyn nicotine pouches and Iqos heated tobacco devices. The smokeless segment accounted for 41% of total revenue for the quarter, a 2.9 percentage-point gain from last year. The company is targeting that smokeless accounts for 67% by 2030.

“Our global smoke-free portfolio is outgrowing the industry by a clear margin, driving positive total volumes, strong top-line growth and impressive margin expansion,” the company said.

The growth of brands like Zyn is crucial for Philip Morris as consumers transition away from cigarettes. The company reported 1% organic revenue growth for its cigarette business in the third quarter and expects total industry volume to decline by 1% in 2025.

Despite the earnings beat, Philip Morris only lifted the floor of its full-year guidance for 2025, which might have disappointed investors. The company expects adjusted earnings per share between $7.46 and $7.56, up from a previous range of $7.43 to $7.56. That estimate implies fourth-quarter earnings of $1.67 a share at the midpoint, lower than the $1.80 expected by Wall Street.

Shares of competitor Altria Group were also down Tuesday, falling 1.9%.

Write to Nate Wolf at nate.wolf@barrons.com