Shares of tobacco and e-cigarette maker Altria Group (MO) - Get Report dipped on Tuesday after the company received a downgrade from Piper Jaffray analyst Michael Lavery amid concern its stake in Juul may not produce earnings that justify the current premium on its potential merger with Philip Morris International (PM) - Get Report .

In a note to clients, Lavery said he was downgrading Altria to neutral from overweight and lowering his price target on the stock to $49 from $64 amid less confidence on Altria's outlook, noting that any interest in a deal without a premium could suggest more stress on the underlying fundamentals and management's outlook.

Lavery also noted that while potential earnings from the company's Juul stake of 35% may be underappreciated, he's also less confident on Altria's approval from both the Federal Trade Commission and Food and Drug Administration, telling clients he prefers "more clarity from regulators."

The tobacco giants in late August announced they were in discussions over a potential all-stock deal as traditional tobacco smoking across the globe declines.

A merger would reunite Philip Morris and Altria more than a decade after the two companies split.

Altria shares were down 0.86% at $43.66 in morning trading on the New York Stock Exchange. Shares of Philip Morris, meantime, were up 0.38% at $73.64.