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Investing.com - BofA Securities raised its price target on Altria (NYSE:MO) to $72.00 from $64.00 on Friday, while maintaining a Buy rating on the tobacco company’s stock. The company, which boasts a 6.03% dividend yield and has maintained dividend payments for 55 consecutive years, trades at an attractive P/E ratio of 13.06. InvestingPro analysis indicates the stock is currently fairly valued.
The price target increase comes as tobacco and nicotine stocks have significantly outperformed the broader market this year, with the S&P 500 Tobacco index up 40% year-to-date and Altria shares gaining 29.4% during the same period.
BofA Securities attributed the tobacco sector rally to several factors, including the March 2024 decision to put the menthol ban on hold and the Republican sweep of national elections, which improved the regulatory outlook for tobacco companies.
Additional factors supporting Altria’s performance include its lack of tariff exposure, ongoing cost optimization programs, and reports suggesting progress in reducing illicit trade at ports of entry, though scanner data has not yet reflected these improvements.
The firm also noted a significant drop in disposable vapes in the latest four-week scanner period ending August 9, while acknowledging these volumes may have shifted to harder-to-track channels such as vape shops.
In other recent news, Altria Group reported its second-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted diluted earnings per share (EPS) of $1.44, compared to the forecast of $1.38. The company’s revenue also exceeded expectations, reaching $6.1 billion, significantly higher than the anticipated $5.2 billion. This strong financial performance led to increased optimism among investors. Additionally, Altria announced a 3.9% increase in its quarterly dividend, raising it to $1.06 per share from the previous $1.02. This marks the 60th increase in the company’s dividend history, with the new dividend payable on October 10, 2025.
Analysts have responded positively to these developments. Stifel raised its price target for Altria to $72, citing the dividend growth as a key factor. BofA Securities also increased its price target to $64, highlighting Altria’s operational resilience despite challenges such as illicit trade and economic pressures. Both firms maintained a Buy rating on the stock, reflecting confidence in the company’s future performance. These recent developments underscore Altria’s ability to navigate a challenging market environment while delivering value to shareholders.
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