Altria Group: HTS Portfolio May Be A Missing Piece In The Puzzle (Rating Upgrade)

Summary:

• Altria’s success depends on its HTS market entry via the Horizon JV with Japan Tobacco, leveraging Marlboro’s brand strength to capture market share in the space underdeveloped in the US.
• Other smoke-free initiatives (on!, NJOY) also hold upside potential, but their financial impact hasn’t been material yet. I believe HTS portfolio is a missing piece in the puzzle.
• Altria’s current valuation is attractive, and as smoke-free initiatives, especially HTS, gain traction, multiples could be higher.
• Altria is a ‘buy’ for patient investors who believe in the market launch of HTS products, but it faces risks from market conditions and competition from established brands like IQOS.

Altria Group (NYSE:MO) is one of my top-tier consumer staple stocks. Its highly profitable smoking business generated margins high enough to provide shareholders with substantial distributions over decades. However, in recent years, the industry has struggled due to the progressing movement

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