Tobacco Stock Set to Dip After Downgrade

Altria Group is again nearing its five-year lows

Managing Editor
Jan 22, 2019 at 9:05 AM
facebook X logo linkedin


The shares of Altria Group Inc (NYSE:MO) are down 2.4% in electronic trading, after Morgan Stanley downgraded the tobacco name to "underweight" from "equal-weight," while trimming its price target to $45 from $54. The analyst in coverage lowered their earnings growth forecast, and warned that Altria's business algorithm is at risk from changing demographic trends and harsh Food and Drug Administration (FDA) regulations. Altria Group will report fourth-quarter earnings before the open on Jan. 31. 

MO stock is set to open dangerously close to its Dec. 26 five-year low of $46.49. The shares bounced from that level to start off 2019, but were quickly stifled by the $50 level, an area that is also home to their descending 50-day moving average. For the past month, analysts have expressed their skepticism over Altria Group's recent JUUL investment.

The stock could be a victim of more bearish analyst attention in the near future. Currently, nine of 14 brokerages in coverage rate MO a "buy" or better, with only one "sell" on the books. Further, its consensus 12-month price target of $57.75 is a 20% premium to Friday's closing perch of $48.31. 

Interestingly, short sellers have been heading for the exits. Short interest fell by 13% in the last two reporting periods to 53.87 million shares, the lowest amount since the April 15 reporting period. MO's inability to take advantage of this exodus of bearish bets only underscores its technical weakness.

In the options pits, calls seem to be preferred. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.76 sits in the 16th percentile of its annual range. The low percentile rank means that near-term option traders have rarely been more call-biased during the past year.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI