Sell-side Consensus: Altria

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Below is a summary of Altria price targets of major financial services firms which updated or reiterated their ratings in the last 12 months. Average sell-side price target for Altria was fairly stable around $50 between Q3 2022 and Q3 2023. However, Q3 3023 release (October 26, 2023) led to a series of price target cuts. Altria reported -2.5% revenue decline and lowered the mid-point of its FY23 EPS guidance on that occasion. Recall: “Altria: Q3 2023 Results“.

Subsequently, Altria’s “not worse-than-expected” Q4 2023 & FY23 results (Feburary 1, 2024) and extended $3.4 billion share repurchase program (following the partial ABI stake sell; March 14, 2024) have provided support to the Altria shares – uplifting the share price from $40 to mid-$40s. As a result, the recent analyst moves are mostly incremental price target increases.

Sell-side targets for Altria currently range from $35 to $52 – with only one (out of 11) above $50. Based on the last closing price of $46.7, the average sell-side target for Altria implies -5.4% downside (i.e. further price target increases are likely if the recent price strength continues).

Over the past 5 years, Altria traded above the sell-side analyst consensus in two separate episodes (March 2021 and March 2022) – which led to subsequent price target increases. However, both of these episodes are followed by major share price reversals and consequent price target cuts. This is Episode 3: “Will the Altria’s price strength and, thereby, the positive sell-side revisions be longer-lasting this time?”

See our “Point of Caution” as you interpret the table below.

DateAnalystFromToRating
July 10, 2024Bank of America$47$48Neutral*
June 21, 2024Deutsche Bank$50$52Buy
June 14, 2024UBS$36.5$36Sell
May 1, 2024Jefferies$47$48Buy
April 19, 2024Citigroup$42$43.5Neutral
Mar 25, 2024Stifel$50$50Buy
Mar 14, 2024Goldman Sachs$46$47Buy
Feb 4, 2024Bernstein$47$43Buy
Jan 30, 2024 Morgan Stanley$44$42Neutral*
Oct 26, 2023TD Cowen$47$42Neutral*
Oct 26, 2023CFRA$45 $35Sell
Consensus$44.22S,4N, 5B
* Market-perform/Equal-weight

Point of Caution

Sell-side work has a level of influence on investors despite the fact that

– the accuracy and knowledge attributed to the analysts tend to be over-stated

– analyst targets are frequently criticized to be reactive, rather than predictive (i.e. following the actual price progression rather than foreseeing it)

– there are serious studies claiming that companies with the most ambitious analyst targets consistently generate subpar returns

– many suspect analysts are influenced by inherent conflicts of interests and business relationships.

Nevertheless, sell-side is an integral part of the business-investing ecosystem and we cover their work for the sake of completeness. Moreover, we need to underline that following decades-long stability in operating and competitive environment, the Tobacco Industry is experiencing a perfect storm of multi-dimensional and concurrent transformation (driven by the replacement of traditional cigarettes by RRP/NGPs) – a phenomenon that makes it more difficult than ever for the sell-side analysts to grasp the business/market dynamics and establish fairly accurate financial models.

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