S&P Downgrades Universal Corp. (UVV) From Hold to Sell

S&P downgraded tobacco processor, Universal Corp. UVV from Hold to Sell, late Friday. They also cut their price target by $10 to $41. Here are a few guotes from the report: “While cigarette manufacturers are seeing the same downward trends in demand as UVV, we see UVV having more limited pricing power. Also, we expect direct sourcing efforts by the largest customers, Japan Tobacco and Philip Morris International, to have a negative impact on sales and margins in fiscal-year 2011 (March) and fical-year 2012 offset somewhat by new business. We cut our target price by $10 to $41, a discount to historical forward multiples and peer valuation. We see dividend yield of about 5% and ample remaining share repurchase authorization of about $120 million as supportive to the shares./E.Kwon-CFA”