Bank of America revised its profit forecasts for two major tobacco companies following regulatory developments in the second quarter that the bank said were favorable to the industry.
US tobacco equities advanced 9.3% in the second quarter. That gain lagged the S&P 500's 14.9% rise over the same period but outpaced several consumer subsectors including beverages, food, household products and other consumer staples. Within the group, Philip Morris International recorded a 9.4% increase and Altria rose 9.0% in the quarter.
The bank pointed to several catalysts that supported the adjustments. Those included heightened oversight of illicit nicotine products and an FDA enforcement stance announced in May that permits certain unauthorized vape and nicotine pouch products to remain on the market while they undergo review. Bank of America also highlighted company-specific events: Philip Morris's announcement of a CFO transition on May 20, the national rollout of ZYN Ultra on June 2, and the FDA's authorization of 20 ZYN variants on June 30.
For Altria, Bank of America increased its second quarter 2026 earnings-per-share estimate by $0.01 to $1.48, which the bank said corresponds to 2.5% year-over-year growth. The firm also lifted its full-year 2026 and 2027 EPS projections by $0.01 each, to $5.67 and $5.91 per share respectively. Despite the modest upward revisions, the bank retained an $82 price target on Altria, using a 13.9x multiple applied to its 2027 earnings estimate.
At Philip Morris International, Bank of America left its second quarter earnings estimate unchanged at $2.04 per share, noting that the figure incorporates a $0.04 foreign-exchange headwind. The bank held its 2026 EPS estimate at $8.40, while nudging its 2027 forecast up by $0.02 to $9.15 per share. Bank of America maintained a $209 price target for Philip Morris, based on a 22.8x multiple applied to the 2027 earnings estimate.
Analysis
The revisions from Bank of America are incremental but reflect the bank's view that recent regulatory and product developments have a positive, if measured, effect on near- and medium-term earnings trajectories for the two companies. The maintained price targets indicate the bank is not changing its underlying valuation framework even as it adjusts earnings modestly.
Key points
- Bank of America raised Altria's Q2 2026 EPS by $0.01 to $1.48 and bumped 2026 and 2027 EPS estimates by $0.01 each.
- Philip Morris's Q2 estimate remained at $2.04, with a $0.04 FX headwind embedded; the 2027 EPS forecast was raised by $0.02 to $9.15.
- Regulatory shifts - including FDA enforcement guidance and authorization of ZYN variants - and product milestones such as the ZYN Ultra national launch were cited as catalysts.
Risks and uncertainties
- Regulatory policy remains a material factor for the sector; the article notes recent FDA enforcement guidance that altered how certain unauthorized products are treated during review.
- Company-level changes, including the CFO transition at Philip Morris announced on May 20, introduce management and execution uncertainty.
- Foreign-exchange effects are a noted headwind for Philip Morris, with a $0.04 FX impact included in the bank's Q2 estimate.
These developments and the bank's measured forecast adjustments provide a window into how regulatory decisions and product activity are being absorbed into sell-side models for tobacco companies. The revisions are modest in magnitude, and Bank of America has preserved its valuation multiples and price targets for both firms.