The Altria Group, Inc.(NYSE:MO) stock was upgraded by UBS Investment Research on Monday to Buy from Neutral, sending shares of tobacco companies on an upswing.
How Should Investors Trade The Tobacco Sector Now? Find Out Here
According to analyst Nik Modi of UBS, who has recommended Altria to investors and clients of the research firm, the group which makes the iconic Marlboro cigarettes is getting higher prices per unit by cutting down on promotional expenses and launching brands at lower discounts.
Modi has also written in favour of Lorillard, which he says has more earnings per growth though the company could face risks in the menthol cigarette market. Altria on the other hand, has a lower exposure to the menthol market while earnings upsides are limited.
Altria's stock added $1.32, or 4.23 percent, to $32.56 in Monday’s session. The stock has traded between $27 and $36.29 over the last year.
Shares of Lorillard Inc.(NYSE:LO), which makes Newport cigarettes, climbed $3.94, or 3.50 percent, to $119.252. The stock has traded in a 52-week range of $106.64 to $141.07.
Elsewhere in the sector, shares of Reynolds American, Inc.(NYSE:RAI), which makes Kool and Camel cigarettes, gained $1.07, or 2.6 percent, to $41.99. Over the past year, the stock has traded between $38.95 and $46.93.