The stocks moved in accordance, with Altria shares up and Philip Morris stock dropping.
Citi’s Adam Spielman upgraded Altria from Neutral to Buy, and downgraded Philip Morris from Buy to Neutral.
Overall, Spielman is moving more bullish on the industry, noting that traditional tobacco companies have fallen to price to earnings ratios last seen when litigation meant bankruptcy was actually a possibility. That’s no longer the case, though.
Even in the face of new lower-risk products, such as e-cigarettes, the traditional product remains.
“It is becoming hard to argue that ‘tobacco is being disrupted,’” Spielman wrote in a note. “We believe investors will start to care less about ‘reduced risk products.’”
While the outlook broadly is good, Spielman favors Altria in the industry over Philip Morris.
Altria shares were up 1.37% to $50.38, while Philip Morris was down by 1.2% to $81.94. BAT shares were down 0.61% at $39.37, while Imperial was up slightly, trading at $22.18.
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