The growth potential for Philip Morris International ‘s heated tobacco technology known as IQOS Iluma is prompting JPMorgan to get more bullish on shares. Analyst Jared Dinges upgraded the cigarette maker to overweight from neutral, saying the recent de-rating of the stock marks an attractive entry point for a global leader spearheading the shift to healthier alternatives to nicotine. “PMI offers for double-digit EPS [compound annual growth] with meaningful cash flow support (7.4% [free cash flow] yield 2024E), diversified risk (for a tobacco company), and who is just at the precipice of launching its highly successful Heated Tobacco brand, IQOS, in the largest nicotine profit pool in the world,” he wrote in a Thursday note. Dinges added Philip Morris’ 12-month forward price-to-earnings ratio trades below its five-year historical average. Philip Morris shares are down 6.4% year to date. Dinges lifted the bank’s price target to $116 a share from $109, reflecting 22% upside from Wednesday’s close. The stock added 1.6% before the bell. PM YTD mountain Shares so far in 2023 By the second half of this year, Dinges expects some of the severe supply chain constraints that have weighed on the initial launch of its IQOS Iluma product to ease, helping accelerate earnings growth into 2024. The device works by heating tobacco without burning it and is safer than smoking a cigarette. By 2030, Dinges sees the Marlboro maker’s smoke free business to capture 12% share of the U.S. nicotine market, and could reach as high as a 20% share of this greater than $20 billion “profit pool.” “Over the medium to long term, as PMI crosses the threshold to become a majority smokefree company (which we anticipate in 2026), we see scope for valuation multiple expansion with the opportunity to have separate listings for the NGP and Tobacco business at some point, which we believe could create incremental value,” Dinges said. — CNBC’s Michael Bloom contributed reporting