Analyst Note
| Philip Gorham, CFA, FRM |On an underlying basis, Philip Morris International's, or PMI, second-quarter results were strong, demonstrating that the tobacco sector is again proving to be fairly defensive in a period of economic challenges. However, the recent strength of the U.S. dollar had a negative impact on second-quarter results, and is likely to do so for the rest of this year. We retain our USD 103 fair value estimate, and with its very strong positioning in heated tobacco and wide economic moat, we continue to view PMI as the quality play in the tobacco group. However, although there is modest upside to our estimate of intrinsic value, some competitors, particularly Imperial Brands, appear even more undervalued.