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What Can Investors Expect from Altria’s Q1 Results?

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Apr. 27 2020, Published 10:31 a.m. ET

Altria (NYSE:MO) will likely report its results for the first quarter of fiscal 2020 on April 30. The stock price performance decreased after the company’s fourth-quarter earnings in January. Altria missed analysts’ top-line expectations in the last quarter. The investments in Juul proved to be a headwind for the company. Juul’s rising legal issues concerned Altria. As a result, the company wrote down its investment in Juul last year and again in January this year. Vaping issues have been impacting the company’s overall sales. Let’s take a look at what analysts expect from Altria in the first quarter.

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What do analysts expect from Altria in Q1?

The impact of the coronavirus could be seen in Altria’s results for the quarter ended in March. As the COVID-19 spread, the demand for anything other than essential products fell. The vaping crisis had already slowed down Altria’s revenue growth. For the first quarter of fiscal 2020, analysts expect the company to report YoY (year-over-year) revenue growth to $4.6 billion. Sequentially, the revenue could be lower than $4.8 billion in the fourth quarter. The fourth-quarter revenue took a hit due to a decline in the e-vapor category. Notably, most states banned e-vapor products. Previously, we discussed how Altria’s management expects the total domestic cigarette industry volume to fall by 4%–6% in 2020.

Analysts also expect Altria to report a profit of $0.98 per share—a 9.0% increase from the same period last year. Sequentially, the amount could be lower than a profit of $1.02 per share in the fourth quarter. The company’s gross margin could be 1.3% higher YoY to 65.3%. Altria’s EBITDA could also grow by 9.7% to $2.5 billion in the first quarter. The company’s cost-saving initiatives benefited its margins. Also, the deal with Cronos Group (NASDAQ:CRON) could be fruitful after the FDA regulates the CBD market in the US. The demand for CBD products is huge due to the health benefits.

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Last week, Philip Morris reported its first-quarter results. The company beat the top and bottom-line estimates. The company’s revenue grew 6.0% to $7.15 billion, while the EPS was around $1.21—higher than analysts’ estimate of $1.13. To learn more, read Philip Morris Beats Top and Bottom-Line Estimates in Q1.

Analysts’ view

Currently, 14 analysts cover Altria stock. Many analysts have a bullish view on the stock due to its higher dividend yield and lower valuation. The company has consistently paid dividends to its shareholders, which makes it a compelling investment during distressing times. Four analysts recommend a “strong-buy,” five recommend a “buy,” and five recommend a “hold.” Jefferies cut the target price to $51 from $5, while Citigroup cut the target price to $45 from $60. The lower target prices could be due to uncertainty surrounding COVID-19.

The average target price for Altria stock is $48.07, which represents an upside potential of 22% for the next 12 months. Meanwhile, Philip Morris (NYSE:PM) has a target price of $83.47, which represents an upside potential of 13% for the next 12 months.

Recently, Altria announced some leadership changes. Notably, CEO Howard Willard retired. In April, Altria stock has gained 1.9%. So far, the stock has fallen by 21.0% YTD. Philip Morris has fallen by 13.4% YTD, while it has gained 0.97% in April.

Stay with us to learn more about how Altria performed in the first quarter and what it expects in fiscal 2020.

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