Credit Suisse Is Updating Philip Morris Estimates

In a report published Tuesday, Credit Suisse analysts maintained a Neutral rating on

, while raising the price target from $80 to $84. Philip Morris reported its 1Q results ahead of expectations despite continued currency headwinds. "FX continues to have a major impact on group results with translational and transactional impacts knocking 14% off sales and hitting margins by over 200bps. Despite this EPS were only off 3% - an increase of 23 percent ex FX, with volumes up and margins up nearly 300bps," the analysts added. The company also raised its full year guidance to 1 percent with the forex impact unchanged. The mid-point guidance implies a 16 percent decline in the earnings in the next three quarters after a 3 percent decline in 1Q. Philips Morris intends to incur additional expenses on the rollout of Reduced Risk Products in Japan and Italy and pilot trials in additional markets. The EPS estimates for 2015, 2016 and 2017 have been raised from $4.20 to $4.34, from $4.45 to $4.64 and from $4.75 to $4.94, respectively. "On our new earnings the shares have a pay-out ratio of 91% - we don't anticipate a return to share buybacks for a while," the analysts stated.