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Bank of America Raises Altria, Philip Morris Estimates on Favorable Regulatory Outlook
Summary
The bank lifted its earnings per share forecasts for the tobacco giants, citing a more relaxed FDA enforcement policy and recent product authorizations as key catalysts for the sector.
Bank of America has increased its earnings estimates for tobacco industry leaders Altria Group and Philip Morris International, citing a series of favorable regulatory developments during the second quarter. The bank's analysts pointed to a more constructive environment for nicotine products in the U.S. as the primary driver for the revised forecasts.
Regulatory Tailwinds
A key factor in the bank's upgraded outlook is a shift in enforcement from the U.S. Food and Drug Administration (FDA). In a May announcement, the agency signaled a more relaxed policy, allowing certain unauthorized vape and nicotine pouch products to remain on the market while under official review.
Bank of America also noted improved oversight of illicit nicotine products as a positive for established players. Specific to Philip Morris, the FDA's authorization of 20 variants of its ZYN nicotine pouches on June 30 was a significant catalyst, following the national launch of ZYN Ultra earlier that month.
Revised Estimates
AdFollowing these developments, Bank of America adjusted its financial models for both companies. The changes reflect slightly higher near-term and future earnings potential.
- Altria Group (MO): The bank raised its second-quarter 2026 earnings per share (EPS) estimate by $0.01 to $1.48, representing 2.5% year-over-year growth. Its full-year 2026 and 2027 EPS estimates were also increased by $0.01 each, to $5.67 and $5.91, respectively. The price target was maintained at $82.
- Philip Morris International (PM): While the second-quarter EPS estimate was held at $2.04, the bank increased its 2027 EPS forecast by $0.02 to $9.15. The price target for Philip Morris was maintained at $209.
Market Context
The revised estimates come after a solid quarter for the tobacco sector. According to the Bank of America note, U.S. tobacco stocks gained 9.3% in the second quarter. While this performance trailed the S&P 500's 14.9% advance, it significantly outperformed other consumer staples categories, including beverages, food, and household products. During the quarter, Philip Morris shares rose 9.4% and Altria stock added 9.0%.