Analysts Cool on Tobacco Stock After JUUL Deal

A shift in sentiment could spark more headwinds for the struggling tobacco name

The shares of Altria Group Inc (NYSE:MO) are down 3.1% in early trading at $48.89, after Citigroup downgraded the stock to "sell" from "neutral," while trimming its price target $45 from $47. In addition, Independent Research downgraded MO to "sell" from "hold" and slashed its price target to $47 from $59, and Stifel chimed in with a price target hike of its own, to $59 from $70. Stifel said that Altria will "struggle to earn a sufficient return" on its investment in JUUL, citing what it saw as a "rich" evaluation.

As such, MO stock is trading at fresh three-year lows for a second straight day, andis on track for its third straight weekly loss. During this time frame, the shares have faced pressure from their descending 20-day moving average. Overall, MO has shed 19% in the past three months.

Despite the recent flurry of bear notes, analyst sentiment remains bullish. Of the 15 brokerages covering MO, 11 rate it a "buy" or "strong buy," with four "sells" on the books. Further, the security's consensus 12-month price target of $62.55 is a 24% premium to yesterday's closing perch of $50.44, suggesting today's onslaught of bear notes could be far from the last.

In addition, short sellers have been skeptical to jump aboard. Shorts in fact have been hitting the exits, with short interest down 15% in the last two reporting periods. However, the 21.28 million shares sold short is the lowest amount since mid-July 2018, and represents a meager 1.1% of MO's total available float.