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Altria Analysts Dissect Q3 Print, Juul Writedown

Jayson Derrick

Tobacco company Altria Group Inc (NYSE: MO)'s third-quarter print was viewed favorably by at least two Street analysts.

The Analysts

Bank of America Merrill Lynch analyst Lisa Lewandowski maintained a Buy rating on Altria with a $54 price target.

Deutsche Bank analyst Steve Powers maintained at Buy, price target lowered from $60 to $58.

BofA: Vaping Crackdown Could Benefit Cigarette Manufacturers 

Altria maintained its 2019 guidance of EPS growth of 5-7% and announced its second IQOS store in Atlanta, along with plans for new locations, Lewandowski said in a Friday note.

The company's investments will likely be disciplined and quick to support new markets and longer-term growth, the analyst said. 

Altria also announced a $4.5-billion impairment charge related to its investment in Juul ahead of what could prove to be a smaller vaping market, she said. 

This could be a positive for big tobacco companies like Altria as users return to cigarettes to satisfy their nicotine fix, Lewandowski said. 

View more earnings on MO

Altria remains best-positioned within the market given its "total tobacco strategy" coupled with its ability to be flexible and adaptive to market changes, according to BofA. 

Deutsche Bank: Q3 Better Than Expected 

Investors should have a favorable reaction to Altria's earnings report, which was highlighted by better-than-expected performance across smokeable volume, total revenue, total EBIT and EPS, Powers said. 

On the other hand, cigarette shipments were down in the quarter, but Marlboro's decline of 6% was at a slower rate than other brands, which supported a "robust" price/mix delivery of positive nine points, the analyst said. 

Altria's $4.5-billion Juul writedown is a negative in "absolute terms," but marks an event that was likely anticipated given the public challenges Juul faces, according to Deutsche Bank. 

Price Action

Altria shares were trading 0.83% higher at $45.16 at the time of publication Friday. 

Related Links:

Altria Takes .5B Writedown On Juul Investment

Altria Group Reports Q3 Earnings Beat, Reaffirms Guidance

Latest Ratings for MO

Date Firm Action From To
Nov 2019 Maintains Neutral
Oct 2019 Upgrades Sell Neutral
Sep 2019 Downgrades Overweight Neutral

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