Market Overview

Altria's Problems Baked Into Price, Now A Buy At RBC

Altria's Problems Baked Into Price, Now A Buy At RBC
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Altria Group Inc (NYSE: MO) has declined 20 percent year-to-date, and one Street expert thinks the new valuation well accounts for enduring fundamental and macro concerns.

The Rating

RBC Capital Markets analyst Nik Modi upgraded Altria to Outperform and maintained a $65 price target on the stock.

The Thesis

By RBC’s assessment, Altria appears hedged from the three largest challenges stunting consumer packaged goods (CPG).

“MO also offers CPG investors a scarce combination of positive pricing, minimal exposure to rising costs and insulation from the retail evolution that is plaguing the broader CPG space,” Modi wrote in a note.

The analyst views concerns over regulation, competition from JUUL, IQOs threats, diminished hope for a bid by Philip Morris International Inc. (NYSE: PM), and Marlboro share concessions overdone.

The Marlboro brand’s losses, driven by a drop in infrequent-user sales and reduced regularity by heavy smokers, are considered staunchable through trade contract revisions and promotions.

“While we understand that making valuation calls in consumer staples has not really worked over the past few years, we believe the current state of the overall CPG space makes MO an attractive place to put new money within our space,” the analyst wrote.

Price Action

At time of publication, Altria was trading slighlty higher at $56.38.

Related Links:

Analyst Remains Confident Philip Morris' Heated Tobacco Product iQOS Could Reshape Company

Why Big Tobacco's Contribution To Anti-Smoking Campaign Isn't As Self-Destructive As It Seems

Latest Ratings for MO

Jan 2019Morgan StanleyDowngradesEqual-WeightUnderweight
Jan 2019Cowen & Co.DowngradesOutperformMarket Perform
Dec 2018CitigroupDowngradesNeutralSell

View More Analyst Ratings for MO
View the Latest Analyst Ratings

Posted-In: marlboro Nik Modi RBC Capital MarketsAnalyst Color Upgrades Analyst Ratings Best of Benzinga


Related Articles (MO + PM)

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ECLJP MorganDowngrades167.0
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