Altria Group Inc (NYSE:MO) is likely to be adversely impacted by lower cigarette volumes due to rising gas and food prices, according to Morgan Stanley.
The Altria Group Analyst: Pamela Kaufman downgraded the rating for Altria Group from Equal-Weight to Underweight, while reducing the price target from $54 to $50.
The Altria Group Thesis: The stock has outperformed the S&P 500 by 27% year-to-date, Kaufman said in the downgrade note.
“With Consumer Sentiment at its lowest level since 2011, Consumer Confidence near a 3-year low, and real wage growth turning negative in March for low income consumers, we are reducing our cigarette industry volume forecasts by 100 bps to -7.5% in 2022,” the analyst wrote.
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She added that the risk-reward seems “skewed to the downside given the combination of near-term fundamental pressures and our longer-term concerns about MO's cigarette portfolio, limited RRP offering, and PM's pending SWMA acquisition.”
MO Price Action: Shares of Altria Group had declined by 6.57% to $50.46 at the time of publication Wednesday, according to Benzinga Pro.
