Philip Morris Stock Rises On FDA Approval For Zyn Nicotine Pouches: Retail’s Upbeat

Shares of Philip Morris International Inc. ($PM) rose more than 1% on Thursday after the US Food and Drug Administration (FDA) authorized marketing of its Zyn nicotine pouch products, lifting retail sentiment.

In a statement, the FDA said it has approved 20 ‘Zyn’ nicotine pouch products following an extensive scientific review, noting these products posed a lower risk of cancer and other serious health conditions given the substantially lower amounts of harmful constituents than cigarettes and most smokeless tobacco products.

This is the first time the agency has authorized nicotine pouch products, which are typically small synthetic fiber pouches containing nicotine designed to be placed between a person’s gum and lip. Zyn will be able to market flavors including mint, coffee, cinnamon, among others.

According to the agency, the pouches could even benefit cigarette smokers by helping them quit.

Sentiment on Stocktwits was ‘bullish’ following the approval. Message volumes were in the ‘extremely high’ zone.

PM sentiment meter and message volumes on Jan 17 as of 1:55 am ET

“To receive marketing authorizations, the FDA must have sufficient evidence that the new products offer greater benefits to population health than risks,” Matthew Farrelly, director of the Office of Science in the FDA’s Center for Tobacco Products, said. “In this case, the data show that these nicotine pouch products meet that bar by benefiting adults who use cigarettes and/or smokeless tobacco products and completely switch to these products.”

Nicotine pouches, which typically lack tobacco, have become immensely popular in recent years.

On Thursday, Morgan Stanley analyst Eric Serotta initiated coverage of Philip Morris with an ‘Overweight ‘rating and $140 price target, Fly.com reported. According to the report, Serotta sees "substantial runway" for the company’s range of smoke-free products and robust growth for Zyn.

According to UBS, US Zyn is estimated to be about 7% of Philip Morris’ fiscal 2024 earnings before interest (EBIT), Fly.com reported citing the firm. UBS said the Zyn approval was a  "slight positive" for Philip Morris.

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