Citigroup Comments on Lorillard's Price Increase Announcement
Citigroup has published a research report on Lorillard (NYSE: LO) after the company announced an $0.06 price increase per pack this morning.
In the report, Citigroup writes, "This morning, LO announced a $0.06 per pack price increase across its cigarette portfolio. The price increase is to take effect 12/12/2011. We note that this follows the $0.05 per pack price increases announced by MO and RAI over the last two days. Unlike MO and RAI, LO will not be price-protecting any of its brands; however, the company did note that the $1.50 per pack off-invoice pricing will remain in place for Newport Non-Menthol. By our calculations, Newport Menthol is now priced at a 6.6% premium to Marlboro at wholesale (up 10 bps), while Maverick is now priced at a 25.8% discount to Pall Mall (vs. a 26.5% discount, previously)."
Citigroup maintains its Buy rating and $127 price target on Lorillard, which is currently trading up $0.10 from yesterday's $109.09 closing price.
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