Joseph Hart 28 March 2025

 

So far, it’s been a challenging year for investors. The S&P 500 rallied in mid-January but dropped by almost 9% in a selloff that erased over $4 trillion in market value. There is a lot going on here, but Donald Trump’s tariff war on major trading partners like Mexico, Canada, and China has created the kind of uncertainty that the market hates.

Despite the gloomy overall picture, several stocks have produced excellent returns of almost 30% or more. One such stock is Philip Morris International (NYSE: PM), whose share price is up 29% this year at the time of writing.

But what explains PMI’s strong start to 2025? Let’s take a look.

Why is PMI having a strong start in 2025?

In Sept 2017, PMI stock peaked at just over $120 a share. Since then, it’s been a bumpy ride, with the price halving during the larger COVID-related crash in March 2020. However, while the rest of the market rallied back strongly, PMI hovered around the $90 to $100 mark until April 2024. Then, things started looking up.

By November 2024, PMI shares broke through the $130 barrier thanks to the following:

  • Harm-reduction products ZYN and IQOS showed significant growth.
  • Analysts from firms like Morgan Stanley and Citigroup are raising their price targets for PMI.
  • PMI posted strong revenue growth figures.

The 29% price rise during 2025 is partly explained by:

Will PMI continue to rise during 2025?

I want to get one thing straight: no one should be coming to me for financial advice. However, with so much uncertainty in the market right now, stock picking will be important throughout 2025.

Goldman Sachs and RBC Capital have both revised their S&P 500 targets down to 6,200 from 6,500 and 6,600, respectively. [4][5] The index closed at 5,600 yesterday, which suggests a 10% return. The big question is whether PMI can beat the market.

Factors that will determine PMI performance during 2025

There are a few things that could push PMI to further heights this year.

  • If ZYN and IQOS’s market reach and customer base continue at a good pace. The y-o-y increase between 2023 and 2024 was around 150%, while this year’s growth was a more modest 30%.
  • Barclays has set a target of $175 by year-end. That could constitute a market-beating performance by a few per cent.[6]
  • PMI’s current Earning Per Share (EPS) is set at between 7% and 9%. Any positive revision would be good news for investors.[7]
  • If inflation and interest rates drop, the overall market could ignite, making it difficult for PMI to finish ahead.

Final thoughts

Declining smoking rates and increased regulatory pressures were meant to be the death knell for tobacco companies. Additionally, many investors stopped holding firms like this in their portfolios because of ethical concerns about selling such a lethal product.

However, as companies like PMI shift towards reduced-harm products like nicotine pouches, these assumptions are being challenged.

So far, PMI’s stellar performance in 2025 could be an impetus for other major tobacco manufacturers to add much-needed variety to their product lines. However, the next winner will need to navigate a complex regulatory maze while also penetrating a crowded market. For now, if you’re looking for some reasonable short-term returns, it’s worth keeping an eye on PMI.