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 for a long-time. However, Q3 3023 release (October 26, 2023) led to a series of price target cuts. Altria reported -2.5% revenue decline and narrowed / lowered the FY23 EPS guidance on that occasion. Recall: “Altria: Q3 2023 Results“. Altria’s “not worse-than-expected” Q4 2023 & FY23 results (Feburary 1, 2024) triggered only a short-lived relief rally and failed to put an end to the price target cuts. Recall: “Altria: Q4 2023 Results“.

Currently, there is no analyst left with Altria price target above $50. Sell-side is also increasingly realizing the transformational challenges faced by Altria (the “bear case”). The average sell-side target for Altria is now down to $43.1. Based on the last closing price of $42.1, Altria is fairly valued (- the only major tobacco companies in which sell-side sees less than 5% upside).

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

Apr 9, 2024UBS$36.1$36.5Sell
Mar 25, 2024Stifel$50$50Buy
Mar 14, 2024Goldman Sachs$46$47Buy
Feb 19, 2024Jefferies$49$47Buy
Feb 4, 2024Bernstein$47$43Buy
Jan 30, 2024 Morgan Stanley$44$42Neutral*
Oct 26, 2023TD Cowen$47$42Neutral*
Oct 26, 2023Citigroup$45$42Neutral
Oct 26, 2023CFRA$45 $35Sell
Oct 10, 2023Bank of America$49$47Neutral*
Consensus$43.12S,4N, 4B
* 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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