Altria Group (MO) Could Benefit From Coming FDA Rule - Stifel

June 22, 2022 7:28 AM EDT
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Stifel Tobacco analyst, Christopher Growe, sees negative implications for the Tobacco industry from a coming FDA notice of proposed rulemaking to establish a maximum level of nicotine in cigarettes and other combusted tobacco products sold in the U.S. to minimally addictive or non-addictive levels. Through the regulation of nicotine, the FDA is seeking to make cigarettes an ineffective delivery method of nicotine intake.

The analyst stated "We view the potential regulation as a clear negative for the combustible cigarette industry in the future (if it is even technically feasible) and a positive for less risky nicotine delivery methods including heated tobacco (IQOS), vapor, and oral tobacco." "Philip Morris International (NYSE: PM) maintains the industry standard for RRP portfolios with its heat-not-burn IQOS products, VEEV vapor products, VEEBA disposable vapor products, and Zyn tobacco-free nicotine pouch products (pending the completion of the Swedish Match acquisition). We remain bullish on the growth prospects for PMI and especially including the Swedish Match acquisition which we believe can both accelerate its transition to RRPs and push revenue attributable to RRPs to upwards of 40% of total revenue while accelerating growth."

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Stifel, Definitive Agreement, FDA