Reynolds American Downgraded at Wells Fargo, But Firm Sees BAT Deal Closing

Shares of tobacco company Reynolds American (RAI) are up on Thursday morning, despite a rating downgrade to "market perform" from "outperform" at Wells Fargo. The downgrade reflects the pending $49 billion acquisition by British American Tobacco. (BTI)

The firm is expecting limited further upside prior to the transaction. Wells Fargo sees the deal closing "without difficulty" given the strategic value and the "sweetened terms."

"We believe RAI remains one of the most innovative consumer product companies and has been successful over the years in: repositioning brands, creating excitement, driving trial for new products and categories, and incorporating technology into its products as a way to increase the value proposition for consumers," Wells Fargo said.

More from Stocks

Dow Rises as Index Looks to End Losing Streak; GE Slumps

Dow Rises as Index Looks to End Losing Streak; GE Slumps

3 Ways to Fix Starbucks Biggest Challenges

3 Ways to Fix Starbucks Biggest Challenges

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

General Electric's Boot From the Dow: Is This as Bad as It Can Get?

News From Starbucks and General Electric Leaves Their Investors Up in Arms

News From Starbucks and General Electric Leaves Their Investors Up in Arms

Facebook Messenger Could Bring in Billions of Dollars -- Here's How

Facebook Messenger Could Bring in Billions of Dollars -- Here's How