UPDATE: Barclays Downgrades Altria (MO) to Underweight
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Barclays analyst Gaurav Jain downgraded Altria (NYSE: MO) from Equalweight to Underweight with a price target of $36.00 (from $53.00).
The analyst comments "BAT’s e-cigarette success poses a real challenge: Per our math, BAT’s FY22 US e-cigarette volumes will constitute c10% of its US nicotine volumes. In addition, its FY22 US e-cigarette retail pricing is +c10% y/y, ahead of its cigarette pricing at 7%. As e-cigarettes grow as a proportion of BAT’s US portfolio, at some point BAT won’t need to price cigarettes up 7% yoy to hit its EPS growth targets. And if BAT takes just 5% pricing on cigarettes, MO wouldn’t be able to take more than 5% pricing. At that point, MO’s US smokeable EBIT would likely enter a sustained decline (assuming US cigarette volumes remain at -5%)."
Shares of Altria closed at $43.19 yesterday.
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