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Altria Stock Falls on Cowen’s Downgrade

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Jan. 7 2019, Updated 1:13 p.m. ET

Cowen’s downgrade

Today, Cowen and Company downgraded Altria Group (MO) from “outperform” to “market perform” due to the accelerating decline in Altia’s cigarette sales. Also, Cowen lowered its 12-month price target from $74 to $53. The new price target represents an upside potential of 5.4% from its January 4 closing price of $50.30.

As CNBC reported, Cowen expects Altria’s cigarette volumes to decline at an annual rate of 7.3% over the next five years, compared to a decline of 3.1% over its previous five years. Weighing in on Altria’s recent investment in e-cigarette manufacturer Juul, Vivien Azer of Cowen said, “Although the Juul investment was likely the right move, Altria is incentivized to accelerate cigarette industry volume declines.”

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Other analysts’ recommendations

Of the 17 analysts that cover Altria, 52.9% have given the stock a “buy” rating while 35.3% favor a “hold” and 11.8% favor a “sell” rating. On average, analysts have set a 12-month price target of $59.29, which represents an upside potential of 17.9% from its January 4 closing price. On December 21, Citigroup downgraded Altria from “neutral” to “sell” and also lowered its price target from $67 to $45. On the same day, Stifel also cut its price target from $70 to $59.

Peer comparisons

Among the 19 analysts who follow Philip Morris International (PM), 52.6% recommended a “buy,” 36.8% recommended a “hold,” and 10.5% recommended a “sell.” On average, analysts have a 12-month target price of $91.00, which represents an upside potential of 30.8% from its stock price of $69.55.

Stock performance

Cowen’s downgrade appears to have led the company’s stock price to fall. As of 12:20 AM ET today, Altria was trading 2.2% lower. Last year was a tough year for Altria. Since the beginning of 2018, the company’s stock price has declined 29.6%. Meanwhile, peer Philip Morris has returned -34.2%. The broader comparative index, the Consumer Staples Select Sector SPDR ETF (XLP), which has invested 8.2% of its portfolio in cigarettes and tobacco companies, has declined 9.6%.

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