Philip Morris International Added to Goldman Conviction Buy List

Recommended List selection Philip Morris International (PM, $50.26, 1.78) was added to Goldman Sach’s Americas Buy List today. Analyst Judy Hong placed a $62 price target on the stock.

“We believe Philip Morris’ premier growth prospect is being significantly underappreciated by the market and see compelling risk/reward at current levels,” Hong wrote. “Our bullish view on PM is based on: (1) above-consensus, healthy EPS growth forecast of 18% in 2010; (2) potential for volume improvement driven by an emerging market recovery and stepped-up innovation behind the Marlboro trademark, (3) margin upside from favorable pricing/mix and cost savings; and (4) an attractive valuation.”

Hong believes PMI’s initial 2010 earnings guidance and a new share repurchase program are potential catalysts for the stock. She further said the company is well positioned to take advantage of demographic trends in key emerging markets and that the relative affordability of cigarettes give the company ample price power moving forward.

BMR Take: We think PMI offers investors a unique opportunity to invest in a stock with an attractive yield and strong growth prospects. In addition, while the global economic slowdown and currency were headwinds last year, the company should get a bit of a tailwind from currency translation and an improving economy in 2010. We currently have a “Buy” Rating and $57 Target on Philip Morris International, and named it one of our picks in our 10 for 10’: High Yield Stocks for 2010 special report.

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Tags: PM