UPDATE: Jefferies Initiates Lorillard with Buy, $139 PT

Jefferies initiates its coverage on Lorillard (NYSE: LO) with a rating of Buy and a price target of $139 per share on strong margin and fundamentals.

Jefferies says, "In our view, LO's equity does not fully reflect its strong margins and fundamentals: Newport is the only growing premium brand despite tough comps and Maverick is a well performing discount product. Currently, the FDA menthol review creates an overhang for the stock which we expect to lift in the future. Share repurchases could slow down this year."

LO closed at $122.74 yesterday.