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Philip Morris International said it expects stronger earnings this year, projecting profit growth that tops Wall Street estimates even as competition intensifies in the fast-growing nicotine pouch segment.

The tobacco group, which markets Marlboro cigarettes outside the United States and is expanding into smoke-free products, forecasts adjusted earnings per share growth of roughly 11% to 13% in 2026. That outlook is above analyst expectations and signals confidence in demand for alternatives to traditional cigarettes.

Zyn Nicotine Pouches Remain Key Driver

A major contributor to the company’s performance is Zyn, its flagship nicotine pouch brand. U.S. shipment volumes rose 19% in the fourth quarter, reflecting continued interest in oral nicotine products.

Revenue from the brand dipped during the period, as promotions and discounts were used to support sales and protect market share. Even with those measures, Zyn remains far ahead of rivals, according to company executives.

Chief Executive Jacek Olczak said competitive gains by other brands may prove temporary. He added that updated versions of Zyn are in development, pending regulatory approvals, to strengthen the brand’s position.

Competition Weighs on Investor Sentiment

Investors have been watching competitors, including British American Tobacco, which has been expanding its presence in nicotine pouches. The added pressure has raised questions about how long Zyn can maintain its rapid growth and pricing strength.

Shares initially dipped in early trading after the forecast, then recovered and were up about 2% later in the session, suggesting the market sees resilience in the company’s strategy.

Industry analysts say the new targets offer reassurance that smoke-free products can offset slowing cigarette sales across many markets.

IQOS and Other Smoke-Free Products in Focus

Philip Morris continues to invest heavily in heated tobacco devices such as IQOS. These products are central to the company’s push away from combustible cigarettes.

Still, some regions present challenges. In Japan, one of IQOS’s largest markets, higher taxes and price increases could limit growth and weigh on shipment volumes this year.

Despite those headwinds, the company said it reached its 2024–2026 performance goals a year early and has set new targets through 2028. Management expects shipment volumes for smoke-free products to grow at high single-digit to low-teen rates over the coming years.

Earnings Guidance Beats Expectations

Philip Morris projected full-year adjusted earnings per share between $8.38 and $8.53 for 2026. Analysts had been looking for about $8.33, according to market data.

The stronger guidance reflects confidence that reduced-risk products, including nicotine pouches and heated tobacco, will keep expanding even as traditional cigarette demand declines.

Outlook for Tobacco Stocks

The company’s results highlight a broader shift within the tobacco industry, where growth increasingly depends on alternatives marketed as lower-risk options. Investors are expected to keep a close watch on U.S. pouch competition, regulatory approvals, and pricing strategies through the year.

With Zyn and IQOS carrying much of the momentum, Philip Morris is betting that its smoke-free portfolio will remain the main engine of earnings and help defend its lead in the global tobacco market.