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.”
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.
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.
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%.