Altria's stock tumbles after Morgan Stanley turns bearish, slashes price target

Shares of Altria Group Inc. tumbled 7.5% toward a more than 4-year low in active afternoon trade Tuesday, after Morgan Stanley turned bearish on the cigarette seller, citing accelerating industry declines, deceleration in earnings growth and regulatory risks. The stock was on track for the lowest close since September 2014. Morgan Stanley analyst Pamela Kaufman downgraded Altria to a rare underweight rating--only 18% of companies covered by Morgan Stanley have underweight ratings--from equal weight, and slashed her price target to $45 from $54. "[Altria's] reliable business algorithm is at risk from shifting demographic trends, category disruption and harsh FDA regulatory objectives," Kaufman wrote in a note to clients. "A large-scale and expensive investment in JUUL despite limited financial and regulatory uncertainty" is a concern. The regulatory risks stem from JUUL's decision to stop selling most of its flavored nicotine liquids following the FDA's plan to restrict the sale of most flavored pod-style cigarettes. The stock has plunged 27% over the past three months, while the SPDR Consumer Staples ETF has shed 4.8% and the S&P 500 has declined 4.5%.

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