Cowen Inc. (COWN, Financial) released new ratings for Altria Group Inc. (NYSE:MO) with a new target price.
Altria Group has been upgraded by analysts at Cowen to Outperform from Market Perform and increased its target price on the U.S. tobacco giant by 10.9% from a previous $64 per share to $71 per share.
Cowen’s upgrade is the third over a total of six ratings delivered by analysts over the last 10 months and preceded by the Royal Bank of Canada Capital’s (from Underperform to Sector Perform) upgrade, released July 31.
Altria Group received another upgrade during 2017 by the Bank of America (BAC, Financial) on Jan. 4. The U.S. firm increased its rating to Buy.
Over the last 10 months, Piper Jaffray Cos. (PJC, Financial) (to Overweight), Jefferies LLC (to Hold) and Citigroup Inc. (C, Financial) (to Buy) initiated a coverage on the U.S. tobacco giant. The company was also downgraded by Berenberg Bank (to Hold) on Feb. 3.
Source: Yahoo Finance
The last analysts’ average price target on Altria Group is $71.69 – as shown in the chart below – and it will be dragged by Cowen’s new price target of $71 per share, a bit down to around $71.64 per share.
Source: Yahoo Finance
The last analysts’ average price target of $71.69 per share is a mean of 13 estimates of analysts who were surveyed. The estimates on Altria Group’s price target range between a low of $62 per share and a high of $80 per share.
Cowen’s price target of $71 represents a 10% upside from the current market value of Altria Group. The U.S. tobacco giant is currently trading at $64.52 per share.
As reported by StreetInsider.com, Vivien Azer – analyst at Cowen – “expects the stock to outperform following the recent correction since the late July FDA announcement. The analyst says strong pricing drives sustainable profit growth.”
The recommendation rating for Altria Group is 2.2 out of a total of 5. This means that today the consensus is for buying shares of Altria Group.
Altria Group has been uptrending again in the last five trading days, but the tobacco stock lost about 4.6% year to date. The price-book (P/B) ratio is 9.98, the price-sales (P/S) ratio is 6.40, the price-earnings (P/E) ratio is 8.52, and the forward P/E ratio is 17.99. The 52-week range is between $60.01 and $77.79.
Altria Group distributes an annual dividend of $2.64 – through quarterly payments of 66 cents – to its shareholders for a dividend yield of 4.29%, which is higher than the Standard & Poor's 500 current dividend yield of 1.89%.
Establishing whether Altria Group is overvalued or undervalued by the stock market at the moment, you can use one or more of the valuation methods outlined in this article to assess the intrinsic value of Altria Group.
Then the intrinsic value of Altria Group can be used in a vertical analysis to determine whether the U.S. tobacco giant may today represent the best buying opportunity compared to its peers.
News about minor tobacco companies that can provide smokers with cigarettes that contain a lower level of nicotine to induce a lower tobacco addiction and therefore reduce the consumption of tobacco over time will only determine an increase in the position in Altria Group and any other publicly traded tobacco giants as their market values will go down a bit. These tobacco giants operate in an industry that will never know a crisis and furthermore they are loyal dividend payers. And in some cases – see Altria Group – they are capable of steadily increasing their dividends over time and guarantee a higher yield than the S&P 500.
Disclosure: I have no positions in any stock mentioned in this article.
