On Friday, BofA Securities made an adjustment to the price target for Altria stock, bringing it down to $61 from the previous $65, while still maintaining a Buy rating on the shares. This change was announced by BofA Securities analyst Lisa Lewandowski, who cited several reasons for the adjustment. According to InvestingPro analysis, Altria currently appears undervalued, trading at an attractive P/E ratio of 8.05x with impressive gross profit margins of 70%.
Lewandowski noted that the revised price target reflects a reduction in the estimated earnings per share (EPS) for the years 2025 and 2026, from $5.39/$5.66 to $5.31/$5.56, respectively. This update incorporates the latest management commentary which has introduced additional uncertainty, particularly regarding NJOY and a lower EPS growth outlook for Altria. Despite these adjustments, InvestingPro data shows the company maintains strong fundamentals, with a remarkable dividend track record of 54 consecutive years of payments and a current yield of 7.9%.
The new price objective is based on a multiple of 11.0 times the anticipated 2026 EPS of $5.56, which is a decrease from the prior multiple of 11.5 times. This adjustment also accounts for a 0-5% premium to Altria's average price-to-earnings (PE) ratio since July 2017, which is a reduction from the earlier 5-10% range. The decrease in premium is attributed to the aggressive regulatory plan unveiled by the FDA in that year, which has influenced the industry's valuation benchmarks.
Despite the challenges facing the U.S. nicotine industry, Lewandowski believes that Altria's "Optimize & Innovate Initiative" and potential election-related tailwinds could support the stock's upward price movement throughout 2025. Additionally, Altria's management has expressed a strong commitment to delivering shareholder returns, emphasizing a progressive dividend policy and the continuation of share buybacks.
In other recent news, Altria Group (NYSE:MO) reported a 54.3% increase in diluted earnings per share (EPS) for the fourth quarter of 2024, despite challenges in the e-vapor market. The company also expects adjusted diluted earnings per share (EPS) for 2025 to range from $5.22 to $5.37, indicating a growth rate of 2% to 5% from the $5.12 base in 2024. In a recent 8-K filing, Altria provided updated financial statements and audits, reaffirming its commitment to regulatory compliance and transparent financial reporting.
In addition, the Trump administration's decision to withdraw a proposal to ban menthol cigarettes is considered positive for tobacco companies, including Altria Group. The U.S. Food and Drug Administration also authorized the marketing of 20 ZYN nicotine pouch products for Philip Morris International (NYSE:PM), marking the first time nicotine pouches have received such approval.
Analysts from Citi maintained a Neutral rating on Altria Group, citing caution for the 2025 outlook due to worsening trends in U.S. combustible product declines. Morgan Stanley (NYSE:MS) initiated coverage on Altria with an Equalweight rating, predicting modest corporate revenue declines and earnings per share growth. BofA Securities upgraded Altria's stock from Neutral to Buy, anticipating potential positive earnings revisions. These are recent developments in the tobacco industry.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.