Breaking News
Investing Pro 0
Black Friday SALE: Up to 50% OFF InvestingPro+ CLAIM OFFER

Altria Upgraded at Morgan Stanley on Price Dip, PT Lowered Following Juul Ban

Stock Markets Jun 24, 2022 09:24
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
MO
-2.08%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Vlad Schepkov

Morgan Stanley analyst Pamela Kaufman upgraded Altria Group (NYSE:MO) to “Equal-weight” rating from “Underweight” citing recent underperformance and a more “balanced risk-reward” but cut the price target to $43 from $47 following the FDA’s ban on Juul's line of products.

The analyst comments that despite persisting concerns over "MO's fundamentals and long-term structural positioning”, the recent sharp pullback – the stock is down over 21% in June alone, vs an 8% drop in the S&P 500 – means “the market is more appropriately pricing in our concerns."

She thus sees the current lower valuation, having contracted "from 8.6x to 7.3x NTM EV/EBITDA (11% below MO's 3 year average," as more compelling and offering a “more balanced risk-reward” – and cites the underperformance as a key reason behind rating upgrade.

The analyst also weighed in on by far the biggest issue surrounding the company in recent days – the FDA’s marketing denial order of the popular Juul line of products.

On that front, she notes that, unlike other companies who usually kept selling products while appealing denial orders, “JUUL may have a harder time remaining on the shelf given the FDA's toxicological concerns and the agency's indication that it may take enforcement action against retailers/distributors who continue to sell.”

To account for the risk, Morgan Stanley chose to "eliminate JUUL from our base case, reflect increasing investment needs behind RRPs, and greater long-term risk around MO's growth outlook", and lower the Price Target to $43 from $47.

Shares of MO closed at $42.51 yesterday, in line with the analyst’s expectations.

Altria Upgraded at Morgan Stanley on Price Dip, PT Lowered Following Juul Ban
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email