Jefferies has initiated coverage on Altria Group (MO, Financial) with an Underperform rating, setting the target price at $50. The analysis comes as part of the firm's broader positive outlook on the global tobacco industry. Alongside tobacco, Jefferies expresses a preference for sectors like beer and consumer health. It predicts that the global nicotine market will experience modest growth through traditional combustible products and emerging next-generation alternatives. However, the analysis highlights structural challenges and high valuation as reasons for the cautious stance on Altria. Meanwhile, British American is highlighted as the analyst's top choice within the sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Altria Group Inc (MO, Financial) is $59.14 with a high estimate of $73.00 and a low estimate of $49.00. The average target implies an downside of 0.67% from the current price of $59.54. More detailed estimate data can be found on the Altria Group Inc (MO) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Altria Group Inc's (MO, Financial) average brokerage recommendation is currently 2.6, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Altria Group Inc (MO, Financial) in one year is $47.26, suggesting a downside of 20.62% from the current price of $59.54. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Altria Group Inc (MO) Summary page.
MO Key Business Developments
Release Date: April 29, 2025
- Adjusted Operating Companies Income (OCI) Growth: Smokeable products segment grew by 2.7%.
- Adjusted OCI Margins: Increased to 64.4%, up 4.2 percentage points year-over-year.
- Net Realization: Robust net realization of 10.8% in the smokeable products segment.
- Domestic Cigarette Volumes: Reported decline of 13.7%; adjusted decline of 12%.
- Oral Nicotine Pouches Shipment Volume: Grew to over 39 million cans, representing 18% growth.
- Oral Tobacco Products Segment Adjusted OCI: Over $400 million with margins at 69.2%.
- Oral Tobacco Products Segment Volume Decline: Estimated decline of approximately 1% when adjusted.
- Dividend Payments: Approximately $1.7 billion paid in the first quarter.
- Share Repurchases: 5.7 million shares repurchased for $326 million.
- Debt-to-EBITDA Ratio: 2.1 times as of March 31.
- 2025 Full Year Adjusted Diluted EPS Guidance: Expected range of $5.30 to $5.45, representing 2% to 5% growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Altria Group Inc (MO, Financial) reported solid adjusted operating income growth in its smokeable products segment, driven by the strength of the Marlboro brand.
- The oral tobacco products segment showed strong performance, with Helix's ON! brand growing its market share and shipment volume significantly.
- Altria Group Inc (MO) continues to return strong cash to shareholders through dividends and share repurchases.
- The company is actively engaging with regulatory bodies and legislators to address the issue of illicit e-vapor products, which currently dominate the market.
- Altria Group Inc (MO) maintains a strong balance sheet with a total debt-to-EBITDA ratio of 2.1 times, aligning with its target.
Negative Points
- Domestic cigarette volumes declined by 13.7% in the first quarter, with industry volumes also experiencing a decline.
- The e-vapor category faces significant challenges due to the prevalence of illicit products, which represent over 60% of the market.
- NJOY, a part of Altria Group Inc (MO), has been impacted by ITC orders, leading to the discontinuation of NJOY ACE shipments.
- The oral tobacco products segment experienced a decline in retail share due to lower moist smokeless tobacco volumes.
- Economic pressures, including inflation, continue to impact consumer purchasing behavior, leading to increased demand for discount products.
