Philip Morris International (PM) is rising sharply after reporting first-quarter 2026 results that topped profit expectations, powered by accelerating growth in its smoke-free portfolio. The company posted adjusted diluted EPS of $1.96, up 16% year over year, as reported net revenues increased 9.1% to about $10.1 billion.

The main upside surprise came from PMI’s International Smoke-Free business, where net revenues rose 24.7% (15.8% organically), supported by higher heated tobacco unit volumes and pricing. IQOS remained the centerpiece, with in-market sales growth reported around 10.9% for the quarter, helping push smoke-free products to 43% of PMI’s total net revenues—an increasingly important mix shift for margins and earnings quality.

Alongside the quarterly beat, PMI updated full-year 2026 EPS framing, projecting adjusted diluted EPS of $8.36–$8.51 while reported diluted EPS is expected at $7.56–$7.71. The market reaction suggests investors are prioritizing the durability of the smoke-free growth engine and the resulting earnings leverage, even as the company navigates pockets of volatility across regions and categories.

Investors will be tracking whether smoke-free volume growth stays in the high-single digits implied by the company’s framework, and whether IQOS momentum remains broad-based across Europe and Japan. Another focus is the U.S. nicotine pouch environment, where PMI has cited inventory normalization and tougher comparisons, as the market assesses how quickly U.S. trends stabilize versus the strong international smoke-free expansion.