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Altria Downgraded at Barclays on Loss of Market Share

Barclays analyst Gaurav Jain downgraded Altria to equal weight from overweight and trimmed his share-price target to $43 from $50.
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Altria  (MO) - Get Altria Group Inc Report shares fell Wednesday after Barclays analyst Gaurav Jain downgraded the tobacco titan to equal weight from overweight and trimmed his share-price target to $43 from $50.

He cited the company’s 100% exposure to the U.S., where it’s losing market share. In a commentary reported by The Fly, Jain forecast U.S. cigarette sales would fall 3% this year and 4% after that.

In April, Altria reported stronger-than-expected first-quarter earnings amid demand for its smoking and smokeless products.

The Richmond, Va., company earned $1.55 billion, or $1.09 a share, vs. $1.12 billion, or 92 cents, in the year-earlier quarter. Analysts polled by FactSet expected earnings of 98 cents.

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Revenue totaled $6.36 billion vs. $5.63 billion a year ago, above analysts’ consensus forecast of $4.3 billion.

Morningstar analyst Philip Gorham wrote in a commentary after the earnings report that Altria was undervalued.

“Underlying trends in the U.S. cigarette industry appear to be intact following Altria's first-quarter results, which included very strong shipment numbers, with comparability affected by a number of technical issues,” he said.

“Aside from adjusting for the timing of some of the company's shipments that were brought forward into the first quarter, we are making only modest tweaks to our estimates for the remainder of the year and our longer-term outlook is unchanged. We are reiterating our wide-moat rating and $54 fair-value estimate.”

Altria shares recently traded at $39.63, down 0.8%, They have dropped 19% over the past three months. And they were down 20% in 2020 through the close of trading on Tuesday.