Core Insights - Philip Morris International's smoke-free business is expanding significantly, with IQOS and ZYN being pivotal to this growth. In Q2 2025, smoke-free business contributed 41% of total net revenues and over 42% of total gross profit, indicating a strong shift from combustible products [1][8]. Smoke-Free Business Performance - Smoke-free business net revenues increased by 15.2% year-over-year (14.5% organically), while gross profit rose by 23.3% (21.5% organically), outpacing the growth of combustible products [1]. - IQOS, the heat-not-burn device, experienced an 11.4% increase in global sales in Q2, with a market share of 31.7% in Japan and a rise of 1.2 points to 10.9% in Europe [2][8]. - ZYN, the leading nicotine pouch, saw a 36% growth in June and 26% in Q2 in the U.S., with global shipments increasing by 43% year-over-year, driven by strong U.S. demand and international expansion [3][8]. Competitive Landscape - Altria Group's on! nicotine pouch brand reported a 26.5% increase in shipments to 52.1 million cans in Q2 2025, capturing an 8.7% retail share of the U.S. oral tobacco market [5]. - Turning Point Brands' modern oral nicotine pouch sales surged nearly tenfold year-over-year, generating $22.3 million in revenues, with a revised full-year sales guidance of $80–$95 million [6]. Valuation and Earnings Estimates - Philip Morris shares have declined by 8.6% in the past month, compared to a 1.7% decline in the industry [7]. - The company trades at a forward price-to-earnings ratio of 20.26X, higher than the industry's average of 14.56X [10]. - Zacks Consensus Estimates indicate year-over-year earnings growth of 14% for 2025 and 12% for 2026 [11].