Tobacco stocks are down across the board today on news that walmart (NYSE:WMT) will stop cigarette sales in some locations. A number of major cigarette companies are down today on the bearish news.
So what do you need to know about Walmart news? And how will this affect tobacco companies?
Well, according to one the wall street journal report, the retail giant plans to end cigarette sales in some US stores. Some stores in California, Florida, Arkansas and New Mexico have already pulled the cigarettes from shelves. Walmart released a statement detailing the logic behind the decision:
“We are always looking for ways to meet our customers’ needs while continuing to operate an efficient business. Due to our continued focus on the tobacco category, we have made a business decision to discontinue the sale of tobacco in select stores. »
Today’s news further reinforces Walmart’s recent focus on healthcare, much like SVC (NYSE:SVC), which ceased tobacco sales in 2014.
A number of major players in the tobacco industry are down today following the news.
Tobacco stocks fall on Walmart News
Altria (NYSE:MO), Philip Morris (NYSE:PM) and British American Tobacco (NYSE:PSTN) are all in the red so far today, between 1% and 3%. It makes sense given current events. Walmart is the largest retail chain in the United States, and losing its business would mean a pretty big hit for tobacco companies. It is estimated that Walmart accounts for about 5% of the cigarette industry’s sales volume.
Today’s news comes as the cigarette industry sees controversial predictions from many analysts. Recently, RBC Capital Markets analyst Nik Modi downgraded Altria from “outperformer” to “sector performer”, arguing that the stock is likely overvalued given its 24% rise since December.
However, not everyone feels so bearish. Last week, Goldman Sachs upgraded Altria to “buy” from its previous “neutral” rating. Analyst Bonnie Herzog argued that Altria is a low-risk, high-margin investment given current international concerns.
As of the date of publication, Shrey Dua did not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.