Why Lorillard (LO) Stock Is Lower This Morning

NEW YORK (TheStreet) -- Shares of Lorillard Inc.  (LO) are down -5.29% to $59.32 after it was reported that Reynolds American Inc. (RAI) and Lorillard are in advanced talks to combine in a deal that would dramatically reshape the U.S. tobacco landscape, creating a powerful number two to industry leader Altria Group Inc. (MO), sources say, the Wall Street Journal reports

A deal would also give Reynolds a commanding position in the fast-developing market for electronic cigarettes, the battery-powered heating devices that turn nicotine-laced liquid into vapor, and represent a growing alternative to traditional smokes, the Journal said.

Reynolds stock is flat.

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TheStreet Ratings team rates LORILLARD INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LORILLARD INC (LO) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

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