UBS upgrades Altria stock rating to Neutral on improved outlook

Investing.com - UBS upgraded Altria (NYSE:MO), the $98 billion tobacco giant with impressive 70.9% gross profit margins, from Sell to Neutral on Wednesday, raising its price target to $59.00 from $47.00 amid signs of increased enforcement against illicit vape products. According to InvestingPro, the company maintains a robust 7% dividend yield and has raised dividends for 15 consecutive years.

The investment firm cited evidence that heightened customs inspections at U.S. borders are leading to more refusals and seizures of unauthorized vapor products, particularly those imported from China. UBS noted that exports of vapor products from China to the U.S. declined approximately 40% in May.

The manufacturer behind Geek Bar, identified as the largest U.S. brand in the category, recently announced production shutdowns, further indicating disruption in the illicit vape supply chain. These enforcement actions represent a positive development for Altria, which has faced significant headwinds from the rapid growth of illicit vapes over the past five years.

UBS estimates that the decline in industry cigarette volumes could improve by approximately 100 basis points to around -8.0% year-over-year. The firm attributes this potential improvement to the crackdown on illegal alternatives.

Altria’s improving cigarette volume share and cost management efforts have led UBS to revise its previous projection that the company’s earnings per share would decline in 2026, supporting the rating upgrade.

In other recent news, Altria Group , Inc. reported several significant updates. The company announced the temporary suspension of trading under its employee benefit plans due to a transition in trustee services, as disclosed in an SEC filing. Additionally, Altria appointed Katie F. Patterson as the new Vice President and Controller, effective August 1, 2025, following the retirement of Steven D’Ambrosia. Shareholders at the Annual Meeting approved the 2025 Performance Incentive Plan and the 2025 Stock Compensation Plan for Non-Employee Directors, alongside a quarterly dividend declaration of $1.02 per share.

S&P Global Ratings upgraded Altria’s credit rating to ’BBB+’ from ’BBB’, citing strong credit metrics and profitability. The firm also affirmed a stable outlook, noting Altria’s pricing power and efforts to enhance its smokeless product pipeline. Despite challenges, such as the removal of the NJOY ACE e-vapor product due to a patent dispute, Altria is expected to maintain solid credit metrics. The FDA and U.S. Customs and Border Protection seized $34 million in illegal e-cigarettes, underscoring ongoing regulatory challenges in the industry. These developments reflect Altria’s current strategic and operational landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.