Why Philip Morris International Might Pull Back

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Philip Morris International (NYSE: PM  ) slipped more than 2% this morning after Goldman Sachs downgraded the cigarette giant from "conviction buy" to "neutral."

So what: Along with the two-notch downgrade, analyst Judy Hong lowered her price target to $95 (from $103), representing about 6% worth of upside to yesterday's close. While value investors might be attracted to the stock's sluggishness in 2013, Hong believes that Philip Morris' near-term prospects remain limited given the headwinds working against it.

Now what: Goldman lowered its 2014-2016 EPS estimates for Philip Morris by an average of 5%. "Weaker end market demand and higher investment needs drive our rating downgrade, and we have lowered our 12- month P/E-based price target to $95 from $103 as we incorporate the lower estimates and a lower multiple (16.0X from 16.5X), the latter of which is driven by a murkier near-term outlook," Goldman noted. With the stock nearly 10% from its 52-week highs and boasting a 4%-plus dividend yield, however, that short-term concern might be providing patient Fools with a juicy long-term income opportunity.

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