Jefferies downgraded Philip Morris to Hold from Buy, slashing its price target to $180 from $220. The broker cites limited re-rating potential for the stock next year due to intense competition in key growth categories, which has capped further multiple expansion.

The firm expects slowing momentum in oral nicotine pouches and heated tobacco in 2026. While U.S. pouch growth remains strong, competition has intensified, with British American Tobacco capturing two-thirds of late-2025 category growth. Jefferies now models 12% U.S. pouch volume growth for 2026, below Street expectations.

In Japan, rising excise taxes and Japan Tobacco's aggressive marketing of its Ploom AURA device are pressuring Philip Morris's heated tobacco share. Jefferies models 7.2% volume growth for 2026, below the Street's 7.7%. These headwinds prompted the firm to cut its 2026 organic sales growth forecast to 5.9% from 7.2%.