UPDATE: Jefferies Downgrades Lorillard On "Underwhelming" e-cigarette Performance

In a report published Thursday, Jefferies analyst Thilo Wrede downgraded Lorillard LO from Buy to Hold and lowered the price target from $54.00 to $51.00. Wrede noted Lorillard's "underwhelming" performance of the recently launched Newport Gold and the uncertainty of the e-cigarette profit outlook. The analyst commented, "While we continue to view LO's cigarette portfolio as the strongest in the industry, our Gold volume opportunity driven Buy thesis is not developing as expected and we therefore see less upside to the stock price." According to Lorillard's management, smokers who have tried Newport Gold report that the product is "outstanding". Unfortunately, the product is not creating enough trial to deliver upon the analyst's market share expectations of a forecasted 1% (versus the actual 0.3%). Due to the disappointing number, Wrede reduced volume and margin outlook for the company. The analyst reported that he is uncertain on the future for the e-cigarette as the e-cigarette segment barely broke even in the fourth quarter of 2013. Jefferies added that the "FDA regulation of the category (the timing for an announcement or the scope of the announcement are unclear at the moment) could also meaningfully alter the growth trajectory." Shares of Lorillard closed at $47.47 on Wednesday.