Should I sell Altria Group shares after RBC lowered its rating?

Altria Group, Inc. (NYSE: MO) shares have advanced more than 10% since the beginning of January 2022, and the current share price stands at $54.

RBC Capital Markets lowered its rating on Altria Group

Altria Group is an American corporation and one of the world’s largest producers and marketers of tobacco, cigarettes, and related products. Altria Group has a strong demand for its products, and the company reported better than expected fourth-quarter results in January.

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Total revenue has increased by 0.8% Y/Y to $5.09 billion, which was above the expectations, while the non-GAAP EPS for the fourth fiscal quarter was $1.09 (beats by $0.01). Billy Gifford, Chairman & CEO, said:

Our plans for the 2022 year include a continuation of our strategy to balance earnings growth and shareholder returns with investments toward our Vision. We expect to deliver 2022 full-year adjusted diluted EPS in a range of $4.79 to $4.93, representing a growth rate of 4% to 7% from an adjusted diluted EPS base of $4.61 in 2021.

Altria Group declared a $0.90/quarterly share dividend in February, payable on April 29 to stockholders of record as of March 25, 2022. The current dividend yield remains above 6%, which makes this stock attractive for dividend-oriented investors.

Despite this, RBC Capital Markets lowered its rating on Altria Group recently and reported that Altria shares have limited room for further upside.

According to RBC Capital Markets, oil prices will remain high for the upcoming quarters, which means the trade down in the cigarette category may continue.

RBC Capital Markets announced that recent scanner data trends are noted to have shown Marlboro is still losing market share, and RBC assigned a $53 price target on Altria shares.

Fundamentally looking, Altria Group is a stable company, and with a market capitalization of $98 billion, shares of Altria remain attractive for long-term-oriented investors.

Altria Group trades at less than eight times TTM EBITDA, and the company’s management is optimistic about the upcoming years in terms of growth which is certainly positive for shareholders.

The positive trend remains intact

Altria Group shares have advanced more than 10% since the beginning of the 2022 year, and according to technical analysis, the positive trend remains intact. If the price jumps above $55, the next price target could be at $57 or even $60.

The current support level stands at $50, and if the price falls below this level, it would be a “sell” signal, and we have the open way to the $45.

Summary

Altria Group shares have advanced more than 10% since the beginning of the 2022 year, and according to technical analysis, the positive trend remains intact. Altria Group has a strong demand for its products; still, RBC Capital Markets recently lowered its rating on Altria Group and reported that Altria shares have limited room for further upside.

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