Altria Group Shares Tumble After Morgan Stanley Downgrade By Investing.com

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Altria Group Shares Tumble After Morgan Stanley Downgrade

Published Jun 08, 2022 05:46AM ET Updated Jun 08, 2022 09:47AM ET

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Altria Group Shares Tumble After Morgan Stanley Downgrade

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By Sam Boughedda

Altria Group (NYSE:MO) shares have tumbled more than 7% Wednesday after the stock was downgraded to Underweight by Morgan Stanley analyst Pamela Kaufman.

Kaufman also lowered the firm's price target on Altria to $50 from $54, telling investors they are lowering long-term forecasts to reflect the growing competitive threat from PM's SWMA acquisition.

"Near term, we anticipate greater pressures from rising gas prices and weaker consumer sentiment, which should weigh on cigarette volumes and enhance trade down risk," said the analyst.

"MO shares have outperformed the S&P 500 by 27% YTD, and when adjusting for the 7% decline in ABI's price in USD, MO's core business is +29% YTD. The market may continue to move toward a more defensive positioning, but we see risk-reward skewed to the downside given the combination of near-term fundamental pressures and our longer-term concerns about MO's cigarette portfolio, limited RRP offering, and PM's pending SWMA acquisition," added Kaufman.

The firm reduced their Altria price target to reflect IQOS's entry into the US market in 2024 as they see an unfavorable risk-reward with a 24% downside to their $41 bear case and 13% upside to their $61 bull case.

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