"PMI is now the most expensive name across global tobacco. Its strong organic performance, focus on the vapour opportunity, and its tendency (incorrectly in our view) to trade in line with the U.S. domestic names has driven re-rating," the firm wrote in an analyst note.
A slowdown to more normalized growth in fiscal 2017 and a muted outlook for dividend development and vapour competition should prompt some multiple give back, according to Jefferies.
"We believe PMI has been given the lion's share of possible value from vapour by investors due to its strong focus on the segment. Increased competition over the next 12 months should see some of this support allocated elsewhere," the firm added.
The New York-based holding company is engaged in the manufacture and sale of cigarettes and other tobacco products.
Shares of Philip Morris were edging higher in pre-market trading on Wednesday.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on Philip Morris stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance.
However, as a counter to these strengths, the team also finds weaknesses including deteriorating net income and weak operating cash flow.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: PM