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Goldman Downgrades Philip Morris on Forecast

Thursday, 21 Nov 2013 06:47 PM

Philip Morris International Inc.’s stock extended its decline into a second day Thursday, tumbling the most since 2010 after a crimped profit outlook prompted Goldman Sachs Group Inc. to cut its rating on the shares to neutral.

The stock sank 3 percent to close at $86.60 in New York, after trading as low as $24.90.  The stock was one of the biggest decliners in the Standard & Poor’s 500 Index. The intraday drop was the steepest since May 2010 and followed a forecast from the world’s largest publicly traded tobacco company for falling volume in Europe and Russia.

In Russia, where President Vladimir Putin earlier this year signed a package of anti-tobacco measures, Philip Morris said cigarette volume may drop as much as 11 percent in 2014. The New York-based maker of Marlboro cigarettes said it expects declines on that basis of as much as 8 percent in the EU region. International volume may fall 2 percent to 3 percent.

“We underestimated some of the challenges in Philip Morris’s key markets,” Judy Hong, a Goldman Sachs analyst, wrote in a note to investors yesterday.

Hong, who previously rated the stock buy, lowered her 12-month price target for the stock to $95 from $103.

Per-share profit excluding currency swings will increase 6 percent to 8 percent in 2014, the company said yesterday in a statement. Its long-term target is for 10 percent to 12 percent growth, it said.

Philip Morris, which fell 2.4 percent Tuesday, had advanced 6.8 percent this year before Thursday. That compares with a 25 percent gain for the Standard & Poor’s 500 Index.

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Philip Morris International's stock extended its decline into a second day Thursday, tumbling the most since 2010 after a crimped profit outlook prompted Goldman Sachs to cut its rating on the shares to neutral.
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Thursday, 21 Nov 2013 06:47 PM
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