Meanwhile, Wells Fargo expects cigarette-industry volumes to slip around 4.4% this year, according to a research note in November. So why now are these illnesses emerging? But she added that investors would eventually come around to the longer-term value of the investment. Record 200 Days With No Local Case Makes Taiwan World’s Envy, City Locked Down for Three Months Has Bleak Lessons for the World, S&P 500 Tumbles in Worst Stock Rout in Four Months: Markets Wrap, U.S. Economy’s Path Less Certain After Record Quarterly Growth, S&P 500 Rebounds to Post Biggest Gain in Two Weeks: Markets Wrap. Click here to find out! Launch In 2021, Marijuana Stocks: Aurora Cannabis Stock Falls As Nelson Peltz Departs, Is MO Stock A Buy As More People Stay Home And Smoke? The information and content are subject to change without notice. *Real-time prices by Nasdaq Last Sale. The investment also follows other moves by Altria to buy its way into faster-growing businesses. Facts will eventually replace hysteria and the industry should return to growth. Today, Altria is performing well operationally, as its recent third-quarter results showed. © 2000-2020 Investor's Business Daily, Inc. All rights reserved. It said, "There have now been 2,051 cases of vaping-related illnesses spread across 49 states, the District of Columbia and the U.S. Virgin Islands." "These findings provide direct evidence of vitamin E acetate (an oil) at the primary site of injury within the lung." The CDC thinks it has found a significant clue. So if vitamin E oil ends up being the culprit, Juul and Altria will be in the clear, at least with concern to the illnesses. But it said that 2019 earnings per share would likely come in "slightly below the low end" of its long-term goal of 7% to 9% EPS growth. These samples were taken from fluid from the lungs of these patients across 10 different states. Multiple vaping bans have been put in place in various cities, states, even countries, and there are multiple ongoing investigations and probes, including some that are criminal. When the tobacco giant first made its investment, “Juul was the market share leader and market growth leader” in vaping, he said. But the next stage of growth in the tobacco industry will be moving current smokers to safer alternatives. Let's conquer your financial goals together...faster. The tobacco company has written its position down to $4.2 billion amid new restrictions on Juul’s business and scrutiny over whether the vaping company hooked a new generation of young users on nicotine. That followed a 1% gain Wednesday. Altria stock edged higher as the tobacco giant confirmed it will take a $12.8 billion, 35% stake in vaping startup Juul Labs to offset weaker cigarette sales. Research from Arcview and BDS Analytics forecasts legal cannabis spending to jump to $23.4 billion in the U.S. and $5.5 billion in Canada by 2022. Right now, revenue growth can be maintained through price increases while volumes continue to decline. Altria has been “highly disappointed” in its Juul investment, CEO Howard Willard said in January. “For several years, Altria and JUUL were competitors in the market for closed-system e-cigarettes. Over this summer and fall, a deluge of illnesses and deaths tied to vaping have surfaced. The Wall Street Journal reported on Wednesday that Altria was close to a deal for a 35% Juul stake.. However, the FDA is moving to crack down on vaping as many teenagers pick up the habit. A CDC official described the finding as "a breakthrough.". Spooky savings for a limited time! Juul, which makes chargeable, thumb-drive like vaping devices with an array of flavors, controls the majority of the U.S. e-cigarette market. Get instant access to exclusive stock lists, expert market analysis and powerful tools with 5 weeks of IBD Digital for only $5! Altria is guiding to compounded EPS growth through 2022 between 5% and 8% off of its 2019 earnings base, which is expected to finish at around $4.23. Ownership data provided by Refinitiv and Estimates data provided by FactSet. While this finding is not enough to be labeled a cause, according to Schuchat, and further testing will be needed, it is the leading hypothesis. Altria is well-positioned to capitalize on this trend with its recently launched IQOS product in the U.S. and its global opportunity with Juul, a large opportunity that is being significantly discounted today. The deal also gives Juul the option to draw on support from Altria's sales team.
Crosthwaite, a former Altria executive who is now Juul’s CEO, has said that he is focused on building the e-cigarette maker for the long-term by preparing premarket tobacco product applications to earn authorization in the U.S. Juul’s latest internal valuation has put the company’s value at about $20 billion, according to an internal memo sent to staff and described to Bloomberg News.
Marlboro maker Altria (MO) on Thursday said it invested $12.8 billion in vaping startup Juul Labs, a 35% stake valuing Juul at $38 billion and representing a massive bet on an exodus away from traditional cigarettes. But Altria stock fell as analysts questioned the price tag and the tobacco giant gave weak earnings guidance. And the company said the debt it was taking on to invest in Juul and Cronos would weigh on profit next year.
Judy Burns, an SEC spokeswoman, declined to comment. Howard Willard, Altria's CEO, said in a statement that the move was an effort to "prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes". The valuation, she said, was also notable because the investment deal also subjects Altria to a six-year standstill agreement under which Altria can't acquire more than its 35% stake.
Here's What Earnings, Altria Stock Chart Show, Marijuana Stocks: Aurora Cannabis Forecasts Lower Sales As New CEO Steps In, Marijuana Stocks Mixed As Martha Stewart's First Cannabis Products Launch, Cannabis Industry Widens Leadership Reshuffle In Quest For Profits. On Dec. 20, 2018, U.S. Marlboro cigarette maker Altria (NYSE:MO) announced it acquired a 35% stake in the privately held e-cigarette company Juul Labs for $12.8 billion.
Its name is Juul. Citron Boosts Shorted Pot Stock: Industry Dynamics Have Just Changed, Marijuana Stocks In 2019: Time To Separate 'Winners From The Sinners', Tilray Adds Political Star Power To Its Flower Power; Marijuana Stocks Fall. Altria said it would use its logistics and distribution expertise to help Juul expand its reach. In announcing the most recent writedown, Altria said it had narrowed the terms of its cooperation with Juul, saying it would no longer give it marketing help and would instead focus solely on assisting Juul through its growing regulatory challenges. Applying a more appropriate multiple of 14x would yield a stock price in the low $60s, representing upside of approximately 35%. Before it's here, it's on the Bloomberg Terminal. The Ascent is The Motley Fool's new personal finance brand devoted to helping you live a richer life. Get market updates, educational videos, webinars, and stock analysis. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. When the news broke, Altria was trading around $51 per share (although the stock was trading in the low $60s before the rumors surfaced). Coupled with a current dividend yield of 7.2%, this should lead investors to a total return in the low-teens on a compounded basis without assuming any increase in the P/E multiple. Cumulative Growth of a $10,000 Investment in Stock Advisor, Altria Has a Juul in the Rough @themotleyfool #stocks $MO $PM, 3 Dividend Aristocrats That Can Withstand Any Election Volatility, Copyright, Trademark and Patent Information. Realtime quote and/or trade prices are not sourced from all markets. Market data powered by FactSet and Web Financial Group. Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. Get 2 months of IBD Digital + Print for only $10.31.
Further, given the stock is currently trading at roughly 10x forward earnings, the potential for multiple expansion can not be ruled out. Cowen analyst Vivien Azer said in a research note that the $38 billion would come as "a bit of a negative surprise to investors," since the figure is around double Juul's last valuation.
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