Altria, British American Tobacco Stocks Tumble as FDA Reportedly Looks to Cut Nicotine

Summary

• The U.S. Food and Drug Administration is reportedly considering to cut nicotine level in cigarettes.
• Altria’s share dropped around 10 percent this week while British American Tobacco declined close to 7 percent on NYSE.
• Share of Philip Morris International, which does not sell cigarettes in the U.S., rose 2.54 percent on Tuesday.

Shares of tobacco companies Altria Group, Inc. (NYSE:MO) and British American Tobacco PLC (NYSE:BTI) continued its downward moment on Tuesday following a report that the U.S. Food and Drug Administration is looking to reduce nicotine level in cigarettes.

Nicotine is a chemical found in tobacco plants. It does not cause cancer, but is highly addictive and keeps people using the tobacco products.

The FDA is reportedly considering cutting the nicotine in cigarettes to a level that does not lead to addiction.

The news on nicotine curb comes at a time when the administration is nearing its April 29 deadline to decide on banning methanol cigarettes.

Altria’s share fell 3.90 percent on Tuesday. Share of British American Tobacco declined 3.61 percent.

Source: Refinitiv, Altria, British American Tobacco shares on NYSE this week

Altria Group

Shares of Altria, which opened at US$52.31 on Monday, fell around 10 percent to end Tuesday’s trading at US$47.17.

The stock plunged over 18 percent in 2020. It hit a 52-week of low of US$35.02 in May, while it rallied to a 52-week high of US$52.59 in March last year.

In 2020, Altria’s adjusted diluted EPS grew 3.6% year over year to US$4.36. Net revenue rose 4.2 percent year over year to US$26.15 billion.

The company projects its full year 2021 adjusted diluted EPS to grow between 3 percent and 6 percent to the range of US$4.49 to US$4.62.

British American Tobacco

British American Tobacco is a London-based company listed on stock exchanges in London and New York.

The stock fell 6.8 percent this week on NYSE to close at US$38.18 on Tuesday. The shares lost 13 percent in 2020. The 52-week trading range is US$41.58 to US$31.60.

In 2020, British American Tobacco’s adjusted EPS rose to £3.32 from £3.24 in the year-ago period. Revenue decreased marginally by 0.4 percent year over year to £25.78 billion. Adjusted revenue grew 3.3 percent at constant rates of exchange.

For the full year 2021, revenue is expected to grow in the range of 3 percent to 5 percent in constant currency. Adjusted EPS growth is anticipated in mid-single figures.

Philip Morris International

The NYSE-listed shares of Philip Morris International Inc. (NYSE:PM) rallied to its 52-week high of US$94.64 on Tuesday after the company reported its results for the first quarter.

The company saw its share price declined around 3 percent in 2020. However, the shares are up over 13 percent year to date.

Source: Refinitiv, Philip Morris share price YTD on NYSE

On Tuesday, Philip Morris, which does not sell cigarettes in the U.S., said its first quarter reported diluted EPS rose 32.5 percent year over year to US$1.55. Adjusted diluted EPS was up 29.8 percent to US$1.57.

Net revenue increased 6 percent year over year to US$7.58 billion. Cigarette shipment volume during the quarter fell 7.3 percent, while heated tobacco unit shipment volume rose 29.9 percent.

For full year 2021, Philip Morris forecasts reported diluted EPS to grow between 15 percent and 17 percent to a range of US$5.93 to US$6.03. Adjusted diluted EPS is projected in the range of US$5.75 to US$5.85, up around 11 percent and 13 percent year over year on an organic basis.