ZYN and IQOS Scale Up: Is Philip Morris Leading the Industry Reset?

Philip Morris International Inc. PM is accelerating its shift from traditional tobacco to reduced-risk products, with strong momentum in its flagship offerings — IQOS and ZYN. In the first quarter of 2025, smoke-free products accounted for 44% of the company’s total gross profit, signaling significant progress toward its goal of becoming substantially smoke-free.IQOS, Philip Morris’ heat-not-burn device, continues to be a global leader in next-gen nicotine delivery, delivering 9.4% growth in HTU-adjusted IMS, bolstered by solid performances in Japan and Europe. Meanwhile, ZYN, the oral nicotine pouch under Swedish Match (acquired in 2022), is quickly becoming a dominant force in the U.S. nicotine market. ZYN shipments surged 53% year over year to 202 million cans, with Philip Morris now expecting 800-840 million cans shipped in 2025, up from its prior forecast.This surge is not just about volume — Philip Morris is seeing bottom-line benefits too. Smoke-free organic revenues rose 20.4%, while gross profit jumped 33.1%, pushing gross margin over 70%, far surpassing margins from combustible products. PM’s multi-category strategy — which also includes VEEV in the e-vapor space — is gaining traction, and its smoke-free products are now available in 95 countries with 38.6 million adult users globally.With robust growth, margin expansion and strategic manufacturing investments in the United States, Philip Morris appears well-positioned to future-proof its portfolio. If current trends hold, the company could redefine its identity in a post-combustible world.Altria & British American Tobacco Step Up Smoke-Free CompetitionAs Philip Morris pushes ahead in the smoke-free nicotine market, key rivals Altria Group, Inc. MO and British American Tobacco p.l.c. BTI are also accelerating their transition. Altria, known for Marlboro in the United States, is expanding its smoke-free portfolio through Helix Innovations, which owns 100% of on! nicotine pouches. In first-quarter 2025, on! shipments rose 18% year over year, driving stable growth in Altria’s Oral Tobacco segment, which posted $654 million in net revenues.Meanwhile, British American Tobacco is targeting 50 million users of smoke-free products by 2030 and aims to generate 50% of revenues from this segment by 2035. In 2024, British American Tobacco’s New Category segment grew 2.5%, with 29.1 million adult users across products like Vuse (vapor), glo (heated) and Velo (oral nicotine). With both companies investing heavily in reduced-risk products, competition in the global smoke-free nicotine market continues to intensify.PM’s Price Performance, Valuation & EstimatesShares of Philip Morris have rallied 52.3% year to date compared with the industry’s growth of 37%.Image Source: Zacks Investment ResearchFrom a valuation standpoint, PM trades at a forward price-to-earnings ratio of 23.34X, above the industry’s average of 15.33X.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for PM’s 2025 earnings implies year-over-year growth of 13.7%, whereas its 2026 earnings estimate suggests a year-over-year uptick of 11.7%. The estimates for 2025 and 2026 have remained unchanged in the past 30 days.Image Source: Zacks Investment ResearchPM stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Altria Group, Inc. (MO): Free Stock Analysis Report Philip Morris International Inc. (PM): Free Stock Analysis Report British American Tobacco p.l.c. (BTI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks