|Bid||3,272.00 x 0|
|Ask||3,270.00 x 0|
|Day's range||3,211.00 - 3,308.50|
|52-week range||116.50 - 3,507.00|
|Beta (5Y monthly)||0.69|
|PE ratio (TTM)||13.15|
|Earnings date||31 Jul 2020|
|Forward dividend & yield||2.10 (6.60%)|
|Ex-dividend date||09 Jul 2020|
|1y target est||3,825.26|
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Although there are many companies pursuing a vaccine for COVID-19, the tobacco industry may be one of the more surprising combatants in this battle. Both British American Tobacco (NYSE: BTI) and Philip Morris International (NYSE: PM) are working on a vaccine for the disease. Unlike automakers or cosmetics companies converting production facilities to make personal protective equipment, it's not the actual manufacturing units of the tobacco companies working to fight COVID-19, but rather their biotech divisions.
The U.S. International Trade Commission has announced a probe into Altria and Philip Morris for alleged patent violations over iQOS heat-not-burn technology.
(Bloomberg) -- New York is joining other Atlantic coast states in allowing beaches to reopen in time for the U.S. Memorial day holiday. Italy had the fewest new coronavirus cases in four days as it prepares to let citizens move freely starting in June.Abbott Laboratories fell after the U.S. Food and Drug Administration said a company test for Covid-19 used by the White House has potential accuracy issues. Cigarette maker British American Tobacco is poised to begin testing an experimental vaccine in humans.The cost of the pandemic could reach as high as $8.8 trillion, the Asian Development Bank said. The German economy shrank the most in more than a decade, offering an early flavor of the damage, while U.S. retail sales plunged in April.Key Developments:Virus Tracker: Cases top 4.5 million; deaths reach 306,000Trump introduces “warp speed” leaders on vaccineU.S. warns Abbott’s virus test has potential accuracy issuesEmpty Times Square rooms signal reckoning for hotelsFarms, ranches seek billions in aid as losses mountVirus revives worst-case scenarios for U.S.-China relationsEating out in London will never be the same againSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. See this week’s top stories from QuickTake here.Trump Seeks to Force Hospitals to Open Books (5:55 p.m. NY)The White House wants Congress to require hospitals and insurers to reveal the prices they negotiate for medical services as part of the next round of coronavirus stimulus, in an effort to short-circuit a legal battle with the health care industry.The U.S. Health and Human Services department published two regulations last year requiring the prices be made public. The industry challenged the rule in court arguing it’s violates the First Amendment, and delayed its implementation. The White House believes making it a law would end the matter, according to people familiar with the matter.N.Y. Tax Revenue Fell 68% in April (5:40 p.m. NY)New York state’s tax revenue plummeted 68.4% in April, as the lockdowns and the extension of tax return filings to July 15 took a toll. It collected $3.7 billion, or $7.9 billion less than the previous April. Personal income-tax revenue fell more than $7 billion from last April, a drop that was primarily due to the delayed tax filing deadline.“New York is facing economic devastation not seen since the Great Depression,” New York Comptroller Thomas DiNapoli said in a news release. “New York and other hard-hit states need the federal government to step up and provide assistance, or the state will have to take draconian actions to balance its budget.”Portual Set to Reopen Beaches (4:50 p.m. NY)Portugal plans to reopen beaches popular with tourists on June 6 as the government eases confinement measures and adopts new rules to keep 1.5 meters (5 feet) between people, Prime Minister Antonio Costa said at a Lisbon news conference. Signs will show the crowd size at any beach, and some may close if too many people congregate. Tourism, including on Portugal’s Atlantic coast, accounts for about 15% of the economy and 9% of employment.NIH Director, Labor Secretary Join Task Force (4:30 p.m. NY)U.S. National Institutes of Health Director Francis Collins and Labor Secretary Gene Scalia are among five new appointees to the White House coronavirus task force, which Vice President Mike Pence said is focusing on getting U.S. business reopened. Pence, the chairman, also added Agriculture Secretary Sonny Perdue to the 23-member group along with Peter Marks, director of the Food and Drug Administration’s Center for Biologics Evaluation and Research; and Thomas Engels, administrator of the Health Resources and Services Administration.Fed Warns of Asset Price Plunge (4:15 p.m. NY)The Federal Reserve in a stark warning said stock and other asset prices could suffer “significant declines” should the pandemic deepen, with commercial real estate being among the hardest-hit.The Fed’s twice-yearly financial stability report flagged risks to the banking system and broader economy and highlighted its race to intervene in markets and temporarily dial back rules on financial firms amid the outbreak.The abrupt shutdown of economies triggered market uncertainty that upended trading from Treasury securities to junk bonds and led to dramatic swings in prices. Markets settled as the Fed flooded the financial system with liquidity.U.S. Cases Rise 2%, Above Week Average (4 p.m. NY)Coronavirus cases in the U.S. increased 2% compared with the same time Thursday to 1.43 million, according to data collected by Johns Hopkins University and Bloomberg News. The increase was above the average daily increase of 1.7% over the past week. Deaths rose 2% to 86,744.New York had 132 deaths, according to Governor Andrew Cuomo. That marked the state’s fifth straight day of deaths below 200 and the first time deaths fell below 150 in seven weeks.In New Jersey, deaths increased by 201 to 10,138, a 2% increase over 24 hours. New cases rose 1% to 143,905, according to Governor Phil Murphy.Florida reported 44,138 cases, up 2.1% from a day earlier, according to the state’s health department. Deaths rose 2.4% to 1,197.California’s cases rose 2.4% to 74,936 while deaths rose 2.5% to 3,108, according to the state’s website.Spain Advances Reopening for 70% of Nation (3:25 p.m. NY)Spain put about 70% of the nation’s population into the second phase of a four-step reopening process, Health Minister Salvador Illa said. Madrid and Barcelona, the nation’s two biggest cities, will remain in the restrictive first phase, he said. Certain rules also are being eased, such as allowing shops to operate without the need for appointments, but Illa said limits will remain on the number of employees per client.Mall of America to Reopen June 1 (2:20 p.m. NY)Minnesota’s sprawling Mall of America will reopen June 1, two weeks after the state allowed on-site retail to resume. The mall, which got 40 million annual visitors before the pandemic, said tenants need time to rehire and train staff as well as clean, sanitize and take safety measures. When open, the 2.5-million-square-foot mall near Minneapolis will limit customers to 50% of capacity. Restaurants and play areas will stay closed until state officials approve.Florida Allows Gyms to Reopen (1:28 p.m NY)Florida gyms can reopen, and retailers and restaurants will be able to operate at 50% indoor capacity, up from 25%, starting Monday, Governor Ron DeSantis said.The state started reopening last week, with DeSantis saying the Sunshine State had dodged the worst-case scenarios predicted by some analysts. He said Friday that ventilator use and Covid-19 patients in intensive-care units have both declined significantly since the start of Florida’s stay-at-home order.“The American people never signed up for a perpetual shelter in place,” DeSantis said.N.J. Virus Deaths Top 10,000 (1:15 p.m. NY)New Jersey deaths from the new coronavirus topped 10,000, days before the state takes steps toward reopening. The toll belies improvements in hospitalization and other data that have led Governor Phil Murphy to take some steps toward restarting the state’s economy. Total hospitalizations are about half of the peak, while patients on ventilators and in intensive care also have dropped.Air France-KLM Reverses, Offers Refunds (12:40 p.m. NY)Air France-KLM will offer refunds to customers whose flights were canceled by the pandemic, a policy reversal that could add pressure on the struggling carrier’s balance sheet. Travelers will get a cash reimbursement or a voucher for a future flight worth 15% more than the initial ticket value, according to a statement. The incentive is to encourage customers to opt for future flights.Through March 31, the value of tickets for flights that may be canceled and for which the airline could be liable for vouchers or refunds reached about 2 billion euros ($2.2 billion), according to the carrier.WHO Pushes Vaccine Access Plan (12:30 p.m. NY)The World Health Organization is pushing a proposal that aims to ensure broad access to Covid-19 treatments and vaccines while offering an appropriate reward to creators.Under the plan offered by Costa Rica, drug companies would voluntarily donate Covid-related intellectual property to a global pool. Countries would be free to decide how to mete out the rights.Countries would retain the right to allow low-cost generics of patented medicines. WHO Director-General Tedros Adhanom Ghebreyesus is urging countries and companies to support the proposal, which will be discussed Monday and Tuesday.Italy Has Fewest Cases in Four Days (12:05 p.m. NY)Italy registered the fewest new cases in four days, as the government considers letting citizens move freely starting on June 3 after more than two months of lockdown.Civil protection authorities reported 789 cases compared with 992 a day earlier, bringing the total to 223,885. Daily fatalities fell to 242 from 262 on Thursday, for a total of 31,610.N.Y. Joins N.J. to Reopen Beaches (11:50 a.m. NY)New York Governor Andrew Cuomo said city, town and county beaches may open in time for the Memorial Day holiday weekend, with group-contact activities like volleyball prohibited. Occupancy will be limited to 50% capacity, the governor said.New Jersey on Thursday announced it would open its beaches for the holiday, and Delaware also is opening. Cuomo said he understands that if New York doesn’t open facilities, residents will just flock to neighboring states.New York had 132 new deaths, the first time the total fell below 150 in seven weeks.Navy Hospital Ship Leaves L.A. (11:40 a.m. NY)The U.S. Navy hospital ship Mercy has left Los Angeles, ending a seven-week deployment aimed at easing the burden on the region’s medical system, U.S. Northern Command said. About 60 personnel will remain to work at skilled nursing facilities, according to a statement. Mercy docked at the Port of Los Angeles on March 27. The USNS Comfort spent April in New York City on a similar mission.Another Brazil Health Chief Leaves (11:30 a.m. NY)Brazil’s health minister quit the post less than a month after his predecessor was fired by President Jair Bolsonaro amid a clash over social distancing steps. Nelson Teich stepped down on Friday, the government said.The Health Ministry reported 13,944 new cases on Thursday, solidifying the nation as the new global hot spot. Infections more than doubled in the past two weeks, pushing the total to 202,918.NYC, Long Island Lockdowns Extended (11:15 a.m. NY)New York City, Long Island and three other regions have failed to meet requirements for reopening, and as a result their lockdowns will remain in effect for at least two more weeks. Five upstate regions -- the Finger Lakes, Central New York, Mohawk Valley, Southern Tier and North Country -- met the criteria, according to an executive order signed Thursday night. New York, Long Island and Western New York met four of seven metrics, while the Capital and Mid-Hudson regions met five. The metrics include requirements for hospital-bed capacity, testing and tracing.Austria to Resume Cultural Events (10:50 a.m. NY)Austria, one of the first countries to ease its lockdown, will allow cultural events again, restarting an important part of its tourism industry. Events with as many as 100 people will be allowed from May 29, rising to 250 in July, when cinemas will reopen as well, and to 1,000 in August. The Salzburg Festival, a major draw for an audience including CEOs and heads of state, will take place in a scaled-down version.U.K. Pubs Dump 70 Million Pints (10:30 a.m. NY)U.K. pubs shut since late March may be forced to dump 70 million pints of beer -- enough to fill more than 16 Olympic-sized swimming pools -- because much of the brew in storage will spoil before reopening in early July, the British Beer and Pub Association said. Some of the unsold beer is being used as feed for anaerobic digesters to create organic fertilizer for farming, the group said.Portugal’s Hospitalized Cases Drop (8:47 a.m. NY)Since Portugal started easing confinement measures on May 4, the number of hospitalized patients has dropped by more than 17%, while cases in intensive care units have declined 16%. Portugal reported 264 new confirmed coronavirus cases on Friday, up from 187 on Thursday, taking the total to 28,583, the government said. The total number of deaths rose by 6 to 1,190.Denmark Records No Virus Deaths (8:42 a.m. NY)The Nordic nation had its first day without Covid-19 related deaths in since mid-March, evidence that its strategy of locking down early has succeeded in bringing the virus under control. The number of deaths was unchanged at 537 on Friday, health authorities in Copenhagen said.Switzerland Opens Borders to Germany, Austria (8:31 a.m. NY)All closed Swiss border crossings will be reopened by the first half of next week in coordination with Germany and Austria, Christian Bock, director at the Swiss Federal Customs Administration, told reporters in Bern.U.S. Retail Sales Post Record Decline (8:30 a.m. NY)U.S. retail sales plunged by the most on record for a second month as the pandemic shuttered businesses, spurred layoffs and kept Americans at home. Revenue at retailers and restaurants fell 16.4% in April from the prior month, worse than the 8.3% drop in March -- previously the worst in data back to 1992.Separately, a gauge of factory activity in New York State shrank in May. The Federal Reserve Bank of New York’s general business conditions index improved to minus 48.5 from an all-time low of minus 78.2 in April, a report out Friday showed.Abbott Labs Slides in Testing Fracas (7:54 a.m. NY)Abbott Labs slipped 3% pre-market on Friday after the FDA issued a warning on possible accuracy issues with the devicemaker’s ID Now test for Covid-19 infections. Quidel, the maker of a competing test, rose 2.8%.“Although it remains to be seen if there are repercussions from this study’s results, the headlines come at a time when new rival tests are coming online, including QDEL’s rapid antigen Sofia,” JPMorgan analysts led by Tycho Peterson wrote.North Face Owner VF Sees Sales Slump (7:52 a.m. NY)VF Corp., whose stable of brands includes Vans and the North Face, expects first-quarter sales to fall by more than half as the coronavirus outbreak upends the retail sector. The shares fell in early trading.The company said it couldn’t estimate the impact of the Covid-19 pandemic beyond the coming quarter, joining a growing list of companies pulling their financial forecasts for the year. Sales and profit in the fiscal fourth quarter, which ended March 28, both missed Wall Street’s estimates.“Through the first ten months of fiscal 2020 our business delivered results above our stated long-term growth objectives,” Chief Executive Officer Steve Rendle said in a statement. “Then the world changed for all of us as a result of Covid-19.”Fiat Seeks $6.8 Billion State-Backed Loan (7:40 a.m. NY)Fiat Chrysler Automobiles NV is in talks to obtain a state-backed credit line of about 6.3 billion euros ($6.8 billion) to strengthen the carmaker’s financial buffer against the steep downturn caused by the coronavirus, according to people familiar with the matter.Fiat’s local unit is discussing the facility with Intesa Sanpaolo SpA, which is the lead lender, the people said, asking not to be named because the matter is private. Sace SpA, Italy’s trade-credit insurer, will provide a public guarantee for 80% of the amount, they said.The guarantee would need to be granted by a decree of the Finance Ministry, the people added.Orban May Give Up Special Powers at End-May (7:30 a.m. NY)Hungary’s Prime Minister Viktor Orban said he may be able to give up special powers granted to him by parliament to fight the coronavirus pandemic at the end of May, according to the state news service MTI. Orban’s comments, reported from a press briefing in Serbia, bring forward the end to a potentially indefinite state of emergency announced in March. The move triggered European Union criticism about whether he was using the pandemic as pretext for a power grab.A Third of U.K. Workers Deemed Vital (7:25 a.m. NY)One in three U.K. workers are in jobs deemed vital during the coronavirus lockdown, and many of them are at heightened risk of contracting the disease. The Office for National Statistics said Friday there were 10.6 million so-called key workers last year and 15% of them are at moderate risk from Covid-19 because of a health condition such as asthma, heart disease and diabetes.The findings are likely to renew calls to improve pay and conditions for those on the front line in the battle against the pandemic, who in general earn less than employees in other occupations. The Institute for Fiscal Studies calculates that a third of key workers get less than the target rate for the national minimum wage.Singapore to Allow More Laborers to Resume Work (7:10 a.m. NY)Singapore will allow more construction laborers to return to work as the city-state looks to restart an economy that has been largely shut because of the coronavirus pandemic. The country will gradually add about 5% of the construction workforce, or about 20,000 workers, from June 2, on top of an existing 5% currently working on critical infrastructure projects.An outbreak among low-wage migrant workers staying in cramped dormitories has led Singapore to record one of the largest virus tallies in Asia. Of the nearly 27,000 total confirmed cases, about 90% are infections among workers in dormitories. Officials said this week that infection rates among this group are “stabilizing” and some 20,000 foreign workers will be ready for discharge from care facilities by the end of May.Cigarette Maker’s Vaccine Poised for Human Tests (6:58 a.m. NY)An experimental Covid-19 vaccine developed by cigarette maker British American Tobacco Plc is poised to begin testing in humans. Pre-clinical tests of the vaccine showed a positive immune response, the London-based tobacco company said Friday in a statement. The first phase of human trials could begin as soon as late June if authorized by drug regulators, BAT said.Drugmakers from around the world have jumped into the vaccine race, with more than 100 candidates in development in the U.S., Europe, China and other regions. BAT rival Philip Morris International Inc. is also testing an immunization. Smoking cigarettes, the two companies’ main products, may raise the risk of severe Covid symptoms, according to the World Health Organization.BAT subsidiary Kentucky BioProcessing uses tobacco plants in making the experimental vaccine, which is derived from the genetic sequence of Sars-CoV-2, the virus that causes Covid. According to BAT, the method generates the vaccine faster than conventional approaches, reducing the time required from several months to about six weeks.U.K. Northerners, Diabetics Among Most Vulnerable (6:33 a.m. NY)People in the North of England and diabetics are far more likely to die from coronavirus, data compiled by the U.K. national health service show. More than a quarter of all fatalities from Covid-19 were people with diabetes, according to the data, which for the first time breaks down deaths by underlying condition. In Northern England, 7,089 people died, nearly double the number of deaths in the South.Separate data from the Office for National Statistics show that more than 27% of care home deaths in England & Wales from March 2 through May 1 were linked to Covid-19. There were 73,180 deaths in the facilities from Dec. 28 to May 1, more than 23,000 above the same period a year earlier.E-Commerce Surge Boosts JD.com (6:02 a.m. NY)JD.com Inc. forecast a 20% to 30% rise in revenue, demonstrating how operating its own warehouses and delivery fleet is helping the e-commerce giant weather China’s economic slowdown. Revenue at China’s second largest online retailer rose a better-than-expected 21% in the March quarter. It forecast sales of between 180 billion yuan and 195 billion yuan this quarter, versus an average analyst estimate for 177.1 billion yuan.JD, which reported results before rivals Alibaba Group Holding Ltd. and Pinduoduo Inc., shows how China’s Covid-19 lockdown is pushing shoppers online, fueling an e-commerce boom. Investors expected JD to better endure the downturn thanks to a direct sales and in-house logistics model that helped it navigate supply disruptions. It’s gained $13 billion in market value since the novel coronavirus emerged in January.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
(Bloomberg Opinion) -- With $250 billion of new U.S. bond issues at investment grade since the middle of March, and 150 billion euros ($164 billion) in Europe, the high-end credit market is an undoubted beneficiary of the central banks’ coronavirus stimulus plans. The debt capital market is definitely back open.Indeed, analysts at Goldman Sachs Group Inc. have bravely ventured that the worst of the widening of credit spreads — where the yield on corporate debt starts to increase faster than that of benchmark bonds — may be over for high-grade issuers.As I’ve written before, it’s important not to see this as a sign that all is well in the entirety of the credit markets: Companies with non-investment grade paper are crucial to the real economy too, but junk bonds are a long way from being in a good place. Defaults are looming.Setting aside the broader economic concerns of this state of affairs, there will be opportunities for investors in finding companies that will emerge from the crisis stronger — or the ones that will get most state support, if you’d prefer to be cynical. Credit selection, akin to stock-picking, will be the answer for those hunting yield. Tread carefully among the rubble and you might find some sparklers.As the Goldman analysts say, the high-grade part of the market is functioning well. There are 16 new issues slated in the euro debt capital markets on Thursday, including bonds from corporate giants such as BP Plc, British American Tobacco Plc and Royal Dutch Shell Plc. There’s even a rare deal coming in sterling, a market that’s been largely shut, from carmaker Volkswagen AG. That will be a significant test for a sector that’s been effectively shutdown by Covid-19.Credit spreads blew out spectacularly in March, and while things have improved, the environment has changed profoundly — even for the higher quality stuff. The premium offered on yields for new issues and overall credit spreads are significantly wider than during the first two months of this year, before the coronavirus struck the West in earnest. For corporate issuers, the heady days of rock-bottom interest rates are over, but this is better news for investors. The potential for positive performance is phenomenal, explaining why so many are diving back in to try to outperform the index. The European Central Bank has 1 trillion euros of bond purchases to complete this year, with as much as 20% of that to steer into eligible investment grade companies. That will be a major tailwind for a spike in the value of corporate debt.The ECB excludes financial firms and junk bonds from its Quantitative Easing program, but the crowded demand for high-quality paper will no doubt steer people toward non-investment grade sales, helping issuers. Also, whisper it, but the eligibility criteria for QE might well be softened.High-yield is still suffering badly from blown-out credit spreads. But it can offer the biggest opportunities to investors, especially if the particular company is critical to any economic recovery. Government credit and bailout plans might add to the appeal of certain sectors such as infrastructure, health and utilities. Less vital industries in the junk bond space will have to pay up to attract buyers. The beleaguered cruise liner company Carnival Corp had to pay a whopping 11.5% coupon to raise $4 billion this week. To get a sense of how far things have gone south for Carnival, at the beginning of March the yield on its existing three-year dollar bond had slipped below 2%. Bank debt might be popular too. Lenders’ senior investment-grade paper is already practically backstopped by national central banks. Subordinated bank debt remains for the brave, albeit the riskiest additional tier-1 perpetuals (known as CoCos, where investors lose out if a company goes bust) will always have their fans among those clamoring for proper yield. Selecting which companies can weather a crisis versus the dead ducks has probably been the most overlooked financial skill-set since the Lehman Brothers crisis, especially in corporate bonds. Blanket QE and the remorseless rise of passive investing has masked what active managers should be best at. It will pay in future to invest in a more selective fashion rather than simply buying the index.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Lloyd Bridges’s character in the disaster comedy “Airplane” captured it quite well when he said, “Looks like I picked the wrong week to quit smoking.” It’s a sentiment shared by people locked down around the world. While demand for most everything outside of food and toilet paper has declined, cigarettes are holding up.In an environment where companies are ditching their profit guidance left, right and center, Imperial Brands Plc, which makes Kool and Gauloises cigarettes, said on Tuesday that so far the virus had had no material impact on performance and trading remained in line with expectations. That echoes comments two weeks ago from British American Tobacco Plc. Shares in Imperial rose as much as 15%In the coronavirus-induced consumer crisis, big tobacco is certainly living up to its defensive reputation.After all, if people are addicted to nicotine, they still need their fix. And the pandemic-stricken world we live in provides incentives to light up more often: Anxiety induced by ever-grimmer headlines; the fact that local stores selling cigarettes are still open; and the ease with which you can take a fag break when working from home as opposed to having to step outside the office.But it’s not unqualified good news for the industry.Imperial, which also makes Golden Virginia tobacco, said that its factories were building contingency stocks, and its Logista distribution business serving Italy, France and Spain was doing the same to ensure supplies could get through to retailers. It’s also possible that as with rice and pasta, consumers are stockpiling cigarettes in case of even more stringent isolation measures down the road. So some demand may have been pulled forward, meaning this uptick might not be sustained in the long term.What’s more concerning is a recent focus on the increased risk of Covid-19 to smokers, and whether that may encourage more people to quit once the crisis has passed. Reports that the state of New York was in discussions about potentially banning cigarettes made headlines, but Bloomberg News reported on Monday that consideration of a ban was “100% not true.”Still, a renewed focus on personal health, especially where everyone’s lungs are concerned, would likely hurt cigarette sales in the future. These are all challenges tobacco companies will have to grapple with as they race to find what alternative product will drive growth if or when the world does kick its cigarette habit. The industry was already working to get past questions about health risks around vaping, which was last year linked with a spate of cases of respiratory illness. Groups including BAT, Altria Group Inc. and Philip Morris International Inc. have invested billions of dollars in electronic cigarettes and devices that heat rather than burn tobacco. Altria took a 35% stake in vaping leader Juul Labs Inc., which it has now written down. Right now, though, with the prospect of economic conditions deteriorating, tobacco’s resilience in the face of recession should come to the fore, especially given that traditional cigarettes remain the industry’s most profitable product. Smokers may trade down if money becomes tight, or switch to rolling their own cigarettes. But Duncan Fox, an analyst at Bloomberg Intelligence, says that even then pure tobacco has higher margins.So from a position a few months ago, where vaping sales were under pressure, but there were worries about an accelerated decline in smoking traditional cigarettes too, Big Tobacco’s core business now looks to be on a surer footing. That’s bad for public health, and for those funds that choose not to invest in cigarettes. But at least it can help preserve the industry’s profits and chunky dividend payouts for investors, when those at many other companies are suffering.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Could British American Tobacco p.l.c. (LON:BATS) be an attractive dividend share to own for the long haul? Investors...
(Bloomberg Opinion) -- Cars and cigarettes have at least one thing in common these days: They are both being disrupted by more modern alternatives. So Stefan Bomhard, the chief executive officer of car dealer Inchcape Plc, should have some idea of what he’ll face when he takes the reins at U.K. cigarette maker Imperial Brands Plc.It isn’t easy to find executives willing to move to the much-aligned tobacco industry. But Bomhard looks a good CEO choice for Imperial, which sells Lambert & Butler cigarettes and Blu vapes. The company had decided to part ways with Alison Cooper in October, a week after a profit warning. She will now step down as with immediate effect.Bomhard did a solid job at Inchcape. While the shares are down about 18% since he became CEO in April 2015, underperforming the FTSE All-Share Index, conditions in car dealing haven’t been easy since Britain voted to leave the European Union and consumer confidence crumbled. It’s still a much better performance than the FTSE All-Share General Retailers Index.The downside is that Bomhard doesn’t have any tobacco experience. But this is less of an issue than it would be in, say, general retailing. Imperial will have plenty of executives with many years’ worth of knowledge of the traditional cigarette business, still the biggest and most profitable part of the group. And he should be able to pull on his prior experience with big global brands in the race to grab market share for Imperial’s new products, whatever they may be.The new chief executive spent his career in consumer goods before joining Inchcape, with roles at spirits company Bicardi, chocolate and candy maker Cadbury, and consumer-goods giant Unilever. That should put him in good stead as Imperial attempts to pivot to alternatives to traditional cigarettes, which could in turn, pave the way for it to diversify into dispensing other adult, highly regulated products, such as cannabis.When Bomhard takes up the role at a yet to be determined date, his first task will be to get to grips with the crisis in the U.S. vaping industry. The company is evaluating the impact of the recent Food and Drug Administration ban on flavors aside from menthol and tobacco for pod-based electronic cigarettes, the type it makes.Then Bomhard will have to work quickly to decide where best to focus Imperial’s attention, and investment. Although the group has strong positions in vaping and oral nicotine, it only entered the heat-not-burn market relatively recently. He must decide whether to expand in this category, which has not been drawn into the crisis in the U.S. vaping industry.He could also look at reshaping other aspects of Imperial’s business, including traditional cigarettes. The company is already seeking to raise up to 2 billion pounds ($2.6 billion) through disposals, including a sale of its premium cigar business. But he could go further, say selling off parts of the portfolio in Asia and Africa, and returning the proceeds to shareholders, or investing more in tobacco alternatives.Either way, Bomhard must take decisive action. Shares in Imperial have fallen more than 20% over the past year, and they trade at a 40% discount to Bloomberg Intelligence’s global tobacco manufacturing valuation peer group. The company even lags Altria Group Inc., which is reeling from its disastrous investment in vaping company Juul Labs Inc.Imperial has long been seen as an acquisition target, with Japan Tobacco Inc. tipped as the most obvious contender. Another possibility would be for Japan Tobacco and British American Tobacco Plc to carve up Imperial’s empire between them along geographical lines. So if Bomhard doesn’t light up the Imperial share price, a bigger rival just might.To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Altria Group Inc.’s investment in Juul Labs Inc. is getting vaporized.The tobacco giant on Thursday announced a $4.1 billion non-cash charge related to its stake in the maker of electronic cigarettes. It’s the second writedown in three months, and means Altria’s 35% stake is now valued at $4.2 billion, about a third of its original $12.8 billion investment. Altria shares more than 5% in midday trading.The Marlboro maker’s Juul transaction, in December 2018, was part of a familiar playbook across Big Tobacco. With demand for cigarettes declining, it had little choice but to join other market leaders in the industry in pivoting toward alternatives with potentially lower health risks, but higher growth prospects.For most players, there have been hurdles along the way. Two years ago, for example, demand for devices that heat rather than burn tobacco slowed in Japan — the biggest market for this kind of alternative — which was a problem for Philip Morris Intenational Inc. and the U.K.’s British American Tobacco Plc. Unfortunately, with Juul, Altria has encountered more challenges than most.A crisis has engulfed the vaping industry after a spate of illnesses and deaths related to electronic cigarette use. Even though there is a growing consensus that these occurrences involved vaping oils carrying the psychoactive ingredient in cannabis, the events have taken their toll on the U.S. vaping market.Juul has been at the forefront of criticism, besieged by lawsuits accusing it of using sweet fruit and candy flavors to overtly target underage users. The Food and Drug Administration recently announced a ban on flavors aside from menthol and tobacco for pod-based electronic cigarettes, such as those made by Juul, pending new rules coming into force in a few months time. Kenneth Shea, analyst at Bloomberg Intelligence, says Juul’s many challenges must include the possibility that the FDA doesn’t approve it to remain on the U.S market. All manufacturers must submit their applications to keep their products on sale by May.Along with the Juul writedown, Altria has moved to renegotiate the terms of its agreement with Juul. It has the option to be released from a non-compete clause if Juul can’t sell electronic cigarettes in the U.S. for at least a year – acknowledging the possibility that Juul won’t get FDA approval -- or if the value of its investment falls below $1.28 billion. This paves the way for Altria to introduce its own vaping cigarettes, or, more likely, according to Bloomberg Intelligence’s Shea, a move away from electronic cigarettes to heat-not-burn. Unlike electronic cigarettes, these haven’t been drawn into the vaping crisis. Altria has the license to distribute IQOS, Philip Morris’s heat-not-burn product, in the U.S. Given the long-term trend for declining smoking rates – Altria will no longer provide multi- year forecasts for U.S. cigarette declines -- all tobacco companies, must find alternatives to traditional cigarettes. At the time of its original investment, Juul was disrupting the industry, leaving Marlboro man trailing in its wake. By getting in on the act, it was hoping to future-proof its business.But Altria should have been more aware of the risks, particularly those related to underage vaping, which were plain to see, after Juul axed social media accounts and pulled some flavors. And it should have factored this into the price it paid. To be fair, it couldn’t have foreseen how the environment for electronic cigarettes in the U.S. would deteriorate so dramatically over the past six months.Altria’s new emphasis on heat-not-burn over vaping looks sensible, but it makes the Juul investment look a very expensive foray into a category it may end up moving away from. As Altria’s investment dollars go up in smoke, so do any hopes that its shift away from cigarettes will be quick or easy. To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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(Bloomberg) -- Instagram is finally making rules to govern content in influencer advertising.Influencers, the photo-sharing app’s most-followed users who are paid by brands to post, will no longer be allowed to promote products related to vaping, tobacco and weapons, Instagram said Wednesday in a blog post. The decision came after the U.K.’s Advertising Standards Authority ruled this week that British American Tobacco can’t use influencer marketing to advertise e-cigarettes. An Instagram representative said the move to ban such posts more broadly was unrelated.Instagram, owned by Facebook Inc., has long allowed people with thousands or even millions of followers to operate their own sponsored-content operations, outside the Facebook ad-buying system, without the level of oversight applied to the rest of the company’s advertising. For years, the company felt that if an influencer had cultivated an audience willing to hear their messages, Facebook shouldn’t get in the way.However, there’s been a surge of sponsored content promoted by influencers, so Instagram wants to “establish clear rules to help protect our community,” at least when it comes to vaping, weapons and tobacco, according to a spokeswoman. Facebook already has rules against such products in its official advertising programs.Instagram reaches a younger demographic than Facebook’s flagship social-media app, and that audience may be more easily swayed by promotions from famous users of the platform. Influencers popular with teens on Instagram have especially helped spread the appeal of e-cigarettes, drawing U.S. Federal Trade Commission scrutiny over their promotional tactics. Beginning next year, Instagram, which recently started requiring new users to disclose their birth dates, will restrict the audience for influencer ads about alcohol and diet supplements.Having new rules doesn’t necessarily mean they’ll be enforced. A few years ago, after pressure from the FTC on advertising disclosures, Instagram started to require influencers to use a specific branded-content tool to disclose the money behind their posts. Influencers regularly flout that rule with little consequence, and sometimes don’t even disclose whether they are paid to post about a product.(Updates with U.K. authorities’ ruling in second paragraph)To contact the reporter on this story: Sarah Frier in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Alistair Barr, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com - British American Tobacco (LON:BATS) jumped midday Monday after a strong vote of confidence from Bank of America (NYSE:BAC).
One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will...