Philip Morris Tumbles as Forecast Prompts Goldman Downgrade

Philip Morris International Inc. extended its decline into a second day, falling the most in five months after a crimped profit outlook prompted Goldman Sachs Group Inc. to cut its rating on the shares to neutral.

The stock fell 3 percent to $86.60 at the close in New York for the steepest drop since June 20. Yesterday, the world’s largest publicly traded tobacco company had forecast falling volume in Europe and Russia.

In Russia, where President Vladimir Putin earlier this year signed a package of anti-tobacco measures, Philip Morris said cigarette volume may drop as much as 11 percent in 2014. The New York-based maker of Marlboro cigarettes said it expects declines on that basis of as much as 8 percent in the EU region. International volume may fall 2 percent to 3 percent.

“We underestimated some of the challenges in Philip Morris’s key markets,” Judy Hong, a Goldman Sachs analyst, wrote in a note to investors yesterday.

Hong, who previously rated the stock buy, lowered her 12-month price target for the stock to $95 from $103.

Per-share profit excluding currency swings will increase 6 percent to 8 percent in 2014, the company said yesterday in a statement. Its long-term target is for 10 percent to 12 percent growth, it said.

Philip Morris, which fell 2.4 percent yesterday, has advanced 3.5 percent this year. That compares with a 26 percent gain for the Standard & Poor’s 500 Index.