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Citi upgraded Altria Group Inc. (NYSE:MO) as part of a more bullish general outlook on tobacco companies, but dropped its rating on Philip Morris International Inc. (NYSE:PM).
The stocks moved in accordance, with Altria shares up and Philip Morris stock dropping.
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The Analyst
Citi’s Adam Spielman upgraded Altria from Neutral to Buy, and downgraded Philip Morris from Buy to Neutral.
The Thesis
Overall, Spielman is moving more bullish on the industry, noting that traditional tobacco companies have fallen to price to earnings ratios last seen when litigation meant bankruptcy was actually a possibility. That’s no longer the case, though.
Even in the face of new lower-risk products, such as e-cigarettes, the traditional product remains.
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“It is becoming hard to argue that ‘tobacco is being disrupted,’” Spielman wrote in a note. “We believe investors will start to care less about ‘reduced risk products.’”
While the outlook broadly is good, Spielman favors Altria in the industry over Philip Morris.
Citi also has “greater conviction” on two other tobacco stocks, Imperial Tobacco Group plc (OTC:IMBBY) and British American Tobacco plc (NYSE:BAT).
Price Action
Altria shares were up 1.37% to $50.38, while Philip Morris was down by 1.2% to $81.94. BAT shares were down 0.61% at $39.37, while Imperial was up slightly, trading at $22.18.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.