Altria Analysts Dissect Q3 Print, Juul Writedown

Tobacco company Altria Group Inc 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. 

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 $4.5B Writedown On Juul Investment

Altria Group Reports Q3 Earnings Beat, Reaffirms Guidance