Altria Inventory Is Sliding. Mounting Woes Value the Tobacco Big a Bull.
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Group inventory is edging decrease on Wednesday, after a downgrade from Argus, which warns that the tobacco big is dealing with a number of headwinds.
Analyst Kristina Ruggeri lower her ranking on Altria (ticker: MO) to Maintain from Purchase, citing the declining worth of the corporate’s investments outdoors of conventional tobacco, and the danger of elevated authorities regulation for cigarettes.
Whereas Altria and different tobacco friends have been transferring to place themselves within the rising marketplace for reduced-risk merchandise and alternate options to conventional cigarettes, the corporate hasn’t seen as a lot success with its diversification efforts. Altria has a forty five% stake in Canadian hashish firm
(CRON), which has seen combined outcomes in current quarters.
Likewise, Ruggeri writes that the corporate’s funding in e-cigarette maker Juul Labs has declined in worth.
Nonetheless, more moderen developments have been grabbing headlines and investor consideration. Late final month, the Meals and Drug Administration stated it deliberate to ban menthol in cigarettes and was contemplating requiring decrease nicotine content material, to non-addictive ranges. As well as, the White Home may additionally increase excise taxes on cigarettes—as Ruggeri notes, these would apply to “merchandise that comprise most of Altria’s income.”
That leads her to trim her full-year earnings-per-share estimate to $4.55 from $4.60, to the midpoint of administration’s steering, and decrease her 2022 EPS estimate to $4.74 from $4.83. She believes the inventory is pretty valued at current ranges.
Altria inventory is down 0.2% to $47.76 in early buying and selling. The shares are up 16.7% 12 months to this point, and up practically 34% within the newest 12 months.
In late April, Altria inventory dropped after the corporate reported combined first-quarter outcomes, instantly following the federal government’s announcement of the menthol ban.
Write to Teresa Rivas at [email protected]
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