Deutsche Bank: Have MO and RAI Reached Their Full Value?

Deutsche Bank has downgraded Altria Group MO and Reynolds American RAI to Hold due to limited upside potential from current price targets. In its tobacco industry research report, Deutsche Bank writes "Share price outperformance rightly owes to favorable domestic fundamentals - stable pricing, improving volume, manageable legal risk, attractive cash return. But valuation near the high end of historical cash flow multiples suggests a more balanced risk/reward. We are moving to the sidelines on Altria and Reynolds owing to limited upside to our target prices, which remain unchanged." Altria Group closed yesterday at $24.25 while Reynolds American closed at $59.92.