KTCIF - Philip Morris: U.S. Ruling Against IQOS Has Little Impact; Buy Its 5% Dividend Yield

• We believe Friday's ITC ruling against IQOS, in the U.S. patent lawsuit brought by British American Tobacco, has limited impact.
• We believe patent claims against IQOS have no merit; Philip Morris has already successfully invalidated several in other courts globally.
• The ITC can ban U.S. imports of IQOS, but likely not immediately; existing IQOS sales in the U.S. are not material.
• The whole lawsuit may become moot with ILUMA, a new device based on a different technology, is launched in H2 this year.
• With shares at $97.70, we expect an exit price of $123 and a total return of 46% (12.0% annualized, including 5% in dividends) by 2024. Buy.

For further details see: