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On Wednesday, Stifel analysts increased the price target for Altria Group , Inc. (NYSE:MO) shares to $63.00, up from the previous target of $60.00, while reiterating a Buy rating on the stock. The adjustment follows Altria’s announcement of a strong start to 2025, with earnings per share (EPS) of $1.23, which is a 6% increase compared to the same period last year. The stock, currently trading near its 52-week high of $60.18, has delivered an impressive 14.42% return year-to-date, with InvestingPro analysis suggesting the shares are slightly undervalued.
The reported EPS exceeded Stifel’s estimates by 2%, bolstered by heightened profitability in Altria’s Smokeable products division and a reduced loss in the All Other business segment. Notably, the Smokeable business’s profit rose by 3% and showed a modest increase even after excluding the impact of lower Master Settlement Agreement (MSA) fees. The company maintains impressive gross profit margins of 70.88%, contributing to its ability to sustain a substantial 6.94% dividend yield.
Despite a 13.7% reported decline in cigarette volume, the underlying profit performance of the Smokeable business surpassed expectations. This robust performance has reinforced confidence in Altria’s capacity to sustain profit growth in the Smokeable segment, particularly after the MSA legal fee benefit is lapped in the fourth quarter.
Altria has also reaffirmed its financial guidance for the year 2025, signaling a steady outlook for the company’s performance. The guidance reiteration and the positive start to the year appear to have contributed to Stifel’s decision to raise the price target for Altria shares.
In other recent news, Altria Group reported strong financial results for the first quarter of 2025, surpassing analysts’ expectations. The company’s earnings per share (EPS) came in at $1.23, exceeding the forecast of $1.19, while revenue reached $5.26 billion, well above the anticipated $4.62 billion. Altria’s performance was bolstered by its Smokable Products segment, which saw a margin increase to 64.4%. Additionally, the company repurchased 5.7 million shares and distributed $1.7 billion in dividends, reinforcing its commitment to shareholder returns.
In terms of market strategy, Altria continues to focus on expanding its smoke-free product pipeline and maintaining its leadership in the premium tobacco segment. The company’s ON! nicotine pouches contributed significantly to its positive results, reflecting growth in the oral tobacco category. Despite challenges such as regulatory pressures on e-vapor products, Altria remains optimistic, with projected EPS growth of 2-5% for the full year 2025. The company is also addressing issues in the e-vapor market, advocating for regulatory reforms to combat illicit products. These developments highlight Altria’s strategic initiatives in adapting to the evolving tobacco and nicotine market landscape.
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