Philip Morris International Rises in Initial Trading

Source from:  By Chris Burritt March 31 (Bloomberg) 04/01/2008

Philip Morris International Inc., spun off by Altria Group Inc. last week, rose as much as 7.1 percent on its first day of New York trading after Lehman Brothers Holdings Inc. and Stifel Nicolaus & Co. urged investors to buy the stock. The overseas company will focus on selling more Marlboro cigarettes in emerging markets now that it's separate from Altria, which aims to sell more snuff to mute falling U.S. cigarette demand, Michael Branca, a Lehman analyst in New York, wrote today in notes to investors. He rated the overseas company as ``overweight'' and Altria as ``equal weight.'' The March 28 spinoff of Philip Morris International gave investors shares in the world's largest publicly traded cigarette company, which accounted for two-thirds of its parent's profit. The move leaves Altria with a leading share of U.S. cigarette sales and a plan to expand its Marlboro brand into smokeless tobacco. ``As Altria's largest and most profitable business, we regard this business as the crown jewel of its portfolio with strong upside potential to its growth,'' Christopher Growe, a Stifel analyst based in St. Louis, wrote today about Philip Morris International. He initiated coverage with a ``buy'' rating. Philip Morris International climbed $2.89, or 5.7 percent, to $53.95 at 12:04 p.m. in New York Stock Exchange composite trading. The stock traded previously on a when-issued basis. Altria increased 1 cent to $22.78. Cost Reductions Philip Morris International, whose main offices are in Lausanne, Switzerland, and Altria told investors March 11 they will increase their dividends and repurchase shares. Each company plans $1 billion in cost reductions by 2011. Among the cuts, Altria is closing its North Carolina cigarette factory as it consolidates manufacturing in Richmond, Virginia. The New York headquarters is also moving to Richmond. The spinoff gave Altria investors one share of the overseas stock for each Altria share they owned March 19. David Dreman, who owned 15.1 million Altria shares through December among $18.5 billion in assets at Dreman Value Management in Jersey City, New Jersey, said he plans to keep shares of both. ``Altria has a very strong position in the U.S.,'' Dreman said March 28 in a Bloomberg Radio interview. China and India ``will be growing and probably very profitable markets for Philip Morris International.'' ----With reporting by Karen Moskow, Roslyn Barreaux and Judy Speicher in New York. Editor: Brad Skillman, Andrea Snyder. To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina at cburritt@bloomberg.net. Enditem