Lisa Lewandowski, an analyst from Bank of America Securities, reiterated the Hold rating on Altria Group (MO – Research Report). The associated price target is $44.00.
Lisa Lewandowski has given her Hold rating due to a combination of factors impacting Altria Group’s performance and outlook. She notes that Altria’s adjusted earnings per share (EPS) saw a modest increase of 2.3% in 2023, but anticipates a similar trend with only a slight growth in EPS for 2024. This projection is influenced by several headwinds, including inflationary pressures, an increase in consumer debt, heightened competition, and a growing market for illicit flavored vapor products. Management’s expectation for 2024 EPS to be between $5.00 and $5.15 reflects a modest growth of 1% to 4%. Additionally, the EPS growth is expected to be more pronounced in the second half of 2024, partly due to extra shipping days that are anticipated to boost cigarette shipments. However, net income for 2024 is expected to remain relatively flat, with share buybacks contributing to EPS growth.
On the positive side, Lewandowski highlights the steady performance of Marlboro’s market share and the impressive growth in volumes of the nicotine pouch product ‘on!’. She also points out Altria’s successful expansion of NJOY distribution to 75,000 stores. Nevertheless, the report also underlines several negative aspects, such as the significant decline in cigarette volumes which surpassed the overall industry contraction, and the decrease in moist smokeless tobacco volumes as consumers shift to oral nicotine products. Altria’s oral tobacco market share saw a 3.7 percentage point drop in 2023. Furthermore, the potential regulatory changes from the FDA regarding nicotine could create additional uncertainty. Lewandowski’s price objective of $44 is based on a multiple that is discounted from Altria’s historical average, reflecting the anticipated challenges and investor sentiment.
In another report released on January 30, Morgan Stanley also maintained a Hold rating on the stock with a $42.00 price target.
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Altria Group (MO) Company Description:
Virginia-based Altria Group, Inc. is a tobacco company, which manufactures and sells cigarettes, smokeless products, and wine in the United States. Its most popular cigarette brand is Marlboro. It sells cigars principally under the Black & Mild brand, and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands. The company also produces and sells varietal and blended table wines, and sparkling wines under the Chateau Ste. Michelle and 14 Hands labels. It also owns wineries in or distributes wines from several other wine regions.
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