UPDATE: Goldman Sachs Downgrades Reynolds American (RAI) to Neutral
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(Updated - September 12, 2016 8:49 AM EDT)
Goldman Sachs downgraded Reynolds American (NYSE: RAI) from Buy to Neutral with a price target of $53.00 (from $56.00). Analyst Judy E. Hong saaid the bull thesis has largely played out.
"Since being added to the Buy list on June 16, 2015, the stock is up +28% vs. SPX up 1.5% and our estimates are no longer above consensus. We also see fading earnings momentum for RAI as (1) US cigarette industry volume declines revert back to the historical rate of decline; (2) Deal synergies are likely to run out by end of 2016; and (3) RAI faces ~$250mm higher settlement costs (or 5% of EPS) in 2017," said the analyst.
Shares of Reynolds American closed at $47.15 yesterday.
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