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Why Analysts Recommend a ‘Buy’ for Altria

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Target price

As of February 1, 2017, Altria Group (MO) was trading at $71.39. This share price may have been priced into the estimates we’ve discussed previously in this series. In this final part, we’ll look at analysts’ recommendations and price targets for the next 12 months.

The better-than-expected 4Q16 earnings, product innovations, and the initiatives taken by the company to improve its productivity and consolidate its operations to cut costs appear to have increased analyst confidence, leading them to raise their target price. As of February 1, analysts forecasted the next-12-month target price to be at $71.2, which represents a fall of 0.3% from current levels.

Peers’ return potentials for the next 12 months are as follows:

  • Philip Morris International (PM) has a target price of $99.06 with a return potential of 3.2%.
  • Reynolds American (RAI) has a target price of $57.01 with a return potential of -4.9%.
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Analyst recommendations

Of the 13 analysts following Altria, 53.8% have given Altria a “buy” recommendation, and 46.2% have given it a “hold.” If analysts raise their target prices for the next 12 months, the price of the stock may also rise.

Although Altria’s share price is higher than its target price, it doesn’t mean an automatic “sell.” Before investing, you should always analyze the various metrics we’ve covered in this series carefully.

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