Bank Of America Raises Altria Price Target Despite FDA Risk


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Altria Group Inc (NYSE:MO) plunged Tuesday after Food and Drug Administration Commissioner Scott Gottlieb said he's concerned about the slow pace of efforts to curb youth smoking. One market bull bought on the news.

The Analyst 

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Bank of America Merrill Lynch analyst Lisa Lewandowski maintained a Buy rating on Altria and raised the price target from $56 to $66.

The Thesis

Gottlieb lamented Juul and Altria’s lack of progress in prohibiting youth access. Media reports pointed to new FDA intervention, including the potential removal of pod-based nicotine products from the market.

Lewandowski said she suspects any threats will lose bite over time.

“Remember that Gottlieb is the ‘outgoing’ FDA commissioner,” the analyst said in a Tuesday note. “While his agenda will likely move forward for now, the FDA’s agenda could be modified or change direction by the next permanent FDA commissioner.”

The next administration may see value in improving adult access to pods to cut down cigarette consumption, she said, mitigating the regulatory threat. 


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Altria’s record of cooperation with the FDA is to the cigarette maker's advantage, Lewandowski said.

The Altria-Juul partnership has advocated for a consumer age limit of 21 and removed flavored pods from non-discriminating distributors, the analyst said. 

“Over the last decade, MO publicly supported FDA oversight of tobacco and, in our opinion, MO is the ‘gold standard’ in terms of U.S. compliance." 

As tobacco remains a continued regulatory target, BofA considers Altria best-positioned to adapt, particularly given its stake in cannabis, Lewandowski said. 

Price Action

Altria shares were down 0.66 percent at $55.64 at the time of publication Wednesday. 

Related Links:

The Positives, Negatives Of Altria's $12.8-Billion Investment In Juul Labs

Analysts Weigh In On The FDA's Position On E-Cigarettes, Menthols


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorNewsPrice TargetReiterationFDAAnalyst RatingsBank of America Merrill LynchLisa Lewandowskitobacco