Market Overview

UBS Looks At The Good And Bad From Altria's Q2

UBS Looks At The Good And Bad From Altria's Q2

Cigarette company Altria Group Inc (NYSE: MO) reported second-quarter results that showed mixed trends, according to UBS.

The Analyst

UBS analyst Robert Rampton maintains a Neutral rating on Altria with a $52 price target.

The Thesis

Altria's quarter was highlighted by better-than-expected reported volumes but worse than expected underlying trends, Rampton wrote in a note. Specifically, smokeable stick volumes rose 40 basis points from last year versus expectations of negative 1.7%. However, volumes adjusted for inventory was down 7% in the quarter versus the industry, which declined 6% as a whole.

Management estimated industry volumes were down 6% on an underlying basis and management revised its full-year volumes decline guidance from negative 4%-5% to a new range of negative 5%-6%. Beyond the current year, management now expects the annual average rate of domestic cigarette industry volume to decline by 4%-6% versus a prior guidance range of 4%-5%.

Consistent with a prior view, the analyst said the core tobacco business is unlikely to achieve Altria's 7% to 9% medium-term compounded annual growth rate guidance. This adds pressure for the JUUL business to perform well to make up the difference.

Price Action

Shares of Altria were trading lower by 4% Tuesday afternoon at $48.26.

Related Links:

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Wells Fargo Likes Altria's Move To Counter Declining Cigarette Sales With Price Hikes

Latest Ratings for MO

Aug 2019MaintainsUnderweight
Jul 2019MaintainsUnderweight
Jul 2019UpgradesNeutralBuy

View More Analyst Ratings for MO
View the Latest Analyst Ratings

Posted-In: cigarettes Robert Rampton tobacco UBSAnalyst Color Earnings News Analyst Ratings Best of Benzinga


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