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On Wednesday, Citi analyst Adam Spielman maintained a Neutral rating and a $52.00 price target on Altria shares (NYSE:MO) following the company’s presentation at the CAGNY conference. Currently trading at a P/E ratio of 8.1x and showing strong financial health with a GREAT rating on InvestingPro, the stock appears undervalued based on Fair Value analysis. Altria confirmed its full-year 2025 earnings per share (EPS) guidance, with a range of $5.22 to $5.37. The company’s CEO highlighted Altria’s focus on succeeding in the smoke-free product market in the United States.
During the conference, Altria’s leadership emphasized the growth in total US nicotine volumes, which have increased at a compound annual growth rate (CAGR) of 2% over the past five years. This rise is attributed to consumers shifting towards vapor and modern oral nicotine products. The company’s strong market position is reflected in its impressive 70.1% gross profit margin and consistent dividend payments, maintaining distributions for 54 consecutive years with a current yield of 7.7%. However, the CEO pointed out that the growth of illicit vapor products suggests flaws in the current FDA regulatory framework for nicotine. Altria expressed optimism that the new US administration might enhance the regulatory system. InvestingPro subscribers can access 15+ additional key insights about Altria’s financial health and market position.
The company also addressed the issue with NJOY, one of the few products with a Premarket Tobacco Application (PMTA), and their belief in a strong public-interest argument to contest the International Trade Commission ( ITC (NSE:ITC)) ban through an appeal.
Altria projected that heated tobacco products are expected to represent 5% of the US nicotine market in the long term. For the Smokables segment, the company remains confident in its ability to continue driving profit growth, supported by its Revenue Growth Management (RGM) initiatives. The RGM strategies are designed to enhance profitability in the face of evolving consumer preferences and regulatory landscapes.
In other recent news, Altria Group reported its fourth-quarter earnings for 2024, with earnings per share (EPS) of $1.29, matching analyst expectations. The company exceeded revenue forecasts by reporting $5.11 billion, compared to the anticipated $5.04 billion. Stifel analysts maintained a Buy rating on Altria shares, with a price target of $60, noting that the company’s EPS growth was slightly above expectations due to a lower tax rate. Altria has projected EPS growth of 2% to 5% for 2025, aligning with Stifel’s projections, and anticipates stronger profits in its Smokeable segment due to reduced Master Settlement Agreement costs.
Additionally, Altria announced a $1 billion issuance in senior unsecured notes, split into two series with varying maturity dates in 2028 and 2035, respectively. The company also authorized a new $1 billion share repurchase program, further emphasizing its commitment to returning value to shareholders. Despite challenges such as increased illicit product activity in the e-vapor sector, Altria remains focused on its 2028 Enterprise Goal of achieving a mid-single-digit compound annual growth rate in EPS. These developments highlight Altria’s strategic financial maneuvers and its ongoing efforts to navigate market challenges while maintaining shareholder returns.
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