Deutsche Bank's Tobacco Industry Report

Deutsche Bank remains bullish on tobacco's above-consensus estimates following company updates, and reviews of recent data and conversations with management in the trade. Stocks have performed strongly since July, and Deutsche remains positive on Altria Group, Inc. MO and Reynolds American, Inc. RAI while remaining Neutral on Lorillard, Inc. LO based on menthol's regulatory risk. Pricing curve remains strong as Altria contends as a good steward consolidating brand strategy behind Marlboro (Phillip Morris International, Inc. PM), Deutsche writes. Smokeless volume growth also remains robust and dual-usage increase and the category is promoted by manufacturers. The key variable here is Skoal, which is now the bigger growth priority and is expected to continue promotion through 2011. Current ratings are as follows: Altria Group MO,$23.68 Buy Reynolds American RAI,$58.90 Buy Lorillard LO,$81.12 Hold See Some of the Top Moving Indexes Here.