Morgan Stanley Downgrades Altria Group On Growing Headwinds

Altria Group Inc MO is likely to be adversely impacted by lower cigarette volumes due to rising gas and food prices, according to Morgan Stanley.

The Altria Group Analyst: Pamela Kaufman downgraded the rating for Altria Group from Equal-Weight to Underweight, while reducing the price target from $54 to $50.

The Altria Group Thesis: The stock has outperformed the S&P 500 by 27% year-to-date, Kaufman said in the downgrade note.

“With Consumer Sentiment at its lowest level since 2011, Consumer Confidence near a 3-year low, and real wage growth turning negative in March for low income consumers, we are reducing our cigarette industry volume forecasts by 100 bps to -7.5% in 2022,” the analyst wrote.

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She added that the risk-reward seems “skewed to the downside given the combination of near-term fundamental pressures and our longer-term concerns about MO's cigarette portfolio, limited RRP offering, and PM's pending SWMA acquisition.”

MO Price Action: Shares of Altria Group had declined by 6.57% to $50.46 at the time of publication Wednesday, according to Benzinga Pro.