Analysts Remain Bullish On Wavering Tobacco Stocks

Both Philip Morris and Altria stocks are trading lower today

Jan 25, 2018 at 2:54 PM
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Cigarette stock Philip Morris International Inc. (NYSE:PM) is sinking today, on news a Food and Drug Administration (FDA) panel voted against the company's health claim for its electronic smoking devices. Sector peer Altria Group, Inc. (NYSE:MO) is getting pulled lower, too, as a result. Yet a closer look at PM and MO proves analysts and options traders are expecting the stocks to go higher.

At last check, Philip Morris was trading down 2.5% at $107.82, putting the shares between their 50- and 200-day moving averages. They're also trying to break out of a series of lower highs that's been in place since the June all-time high of $123.55.

In the meantime, analysts have remained bullish. Nine of the 11 brokerages covering PM say to "buy" it. Moreover, the average 12-month price target of $122.53 represents upside of 13.6%. Clearly, the general opinion on Wall Street is that Philip Morris will break north from its current downtrend.

Turning to the options pits, a quick check at the security's 10-day call/put volume ratio from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) hints at bullish expectations. Specifically, this reading comes in at 2.23, and ranks in the 82nd annual percentile -- so call buying has been unusually popular in recent weeks.

As for Altria stock, it's down 2.2% today at $70, but earlier bounced from the 50-day moving average, a trendline that's offered very nice support since mid-October. Like its sector peer, MO is still looking up at its all-time highs from June, but analysts are overwhelmingly bullish. That is, nine of the 12 analysts in coverage have "strong buy" recommendations in place.

Options data is just as bullish, too. Altria has a 10-day call/put volume ratio of 2.44 at the ISE, CBOX, and PHLX. This ranks in the top quartile of its annual range, showing call buyers have taken aim at this name, as well.

 

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