PM – Market expectations are for rapid Uniform ROA expansion, and management is confident about lower-than-expected revenue declines, outlook, and iQOS

• • • Phillip Morris International (PM:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 21.4x Uniform P/E, implying bullish expectations for the firm. Moreover, management is confident about lower-than-expected revenue declines, outlook, and iQOS
    • Specifically, management is confident that total industry volume in the European Union region for cigarettes and heated tobacco units declined by 1.9% in 2017, slightly better than their forecast decline range of 2% to 3%, and that Saudi Arabia and the United Arab Emirates accounted for 60% and 20%, respectively, of the GCC cigarette industry volume prior to the 2017 tax increases. Furthermore, they are confident that that favorable inventory movements primarily reflected the establishment of appropriate distributor inventory levels of heated tobacco units, given the current high dependence on a single manufacturing center, and that they lose money on their iQOS devices currently, but for good reason