Amidst FDA Crackdown On Vaping, How Is Altria Stock Performing?

by Trefis Team
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Altria Group, Inc.
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Despite belonging to a largely stable defensive tobacco industry, Altria stock (NYSE: MO) dropped 3% in the last one month and currently trades close to $49 per share. The recent decline was driven by the FDA increasingly asking e-cigarette manufacturers to justify their existence. Though September 9 was the timeline by which the FDA was supposed to determine which of these vaping products could still be sold, it did not announce any decision on JUUL products. While it has taken action against others, it said in a statement that “there’s more work to be done to complete our remaining reviews.” Altria bought a 35% stake in JUUL in late 2018, but JUUL’s profit and sales expectations have faded. Competition and lawsuits alleging misleading health claims and efforts to target younger consumers have piled up. Due to the regulatory uncertainty and questions being raised about its products, Altria stock has shown weakness over the recent weeks. But will Altria’s stock continue its downward trajectory over the coming weeks, or is a recovery in the stock more likely?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for MO stock are likely to average 3.5% in the next three-month (63 trading days) period after experiencing a 3% drop over the previous one-month (21 trading days) period. Also, there is a 65% chance of the stock giving positive returns over the next three months. But how would these numbers change if you are interested in holding MO stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Altria stock price forecast after a rise or fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day! For additional details about Altria historical returns and return comparison to peers, see Altria (MO) Stock Return.

MACHINE LEARNING ENGINE – try it yourself:

IF MO stock moved by -5% over five trading days, THEN over the next 21 trading days, MO stock moves an average of 0.7%, with a 52.5% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of MO Stock Movements:

Question 1: Is the price forecast for Altria Group, Inc stock higher after a drop?

Answer:

Consider two situations,

Case 1: Altria Group, Inc stock drops by -5% or more in a week

Case 2: Altria Group, Inc stock rises by 5% or more in a week

Is the price forecast for Altria Group, Inc stock higher over the subsequent month after Case 1 or Case 2?

MO stock fares about the same in both Cases, with an expected return of 0.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an expected return of 0.7% for Case 2. This implies a price forecast of $49 in Case 1 and a figure of $49 in Case 2 using MO market price of $48.74 on 9/30/2021.

In comparison, the S&P 500 has an expected return of 3.1% over the next 21 trading days under Case 1, and an expected return of just 0.5% for Case 2 as detailed in our dashboard that details the expected return for the S&P 500 after a rise or drop.

Try the Trefis machine learning engine above to see for yourself how the forecast for Altria Group, Inc stock is likely to changes after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Altria Group, Inc stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For MO stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the stock price forecast after a rise if you wait for a while?

Answer:

The expected return after a rise is understandably lower than after a drop as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

MO’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Altria Group, Inc stock by changing the inputs in the charts above.

 

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