Altria's decision to proactively respond to a regulatory crackdown on tobacco products that appeal to teenagers is a positive argument that strengthens the company's appetite for relaxing anti-smoking supporters and helping to combat Juul's competitive pressures, an analyst said Thursday.
MO, + 1.48%
said it pulls its MarkTen Elite and Apex from MarkTen e-cigarette tubes out of store shelves until it either gets the blessing of the US Food and Drug Administration to sell them or The problem that adolescents become addicted to nicotine is resolved differently, the company said in the third quarter.
The company will also stop selling products with tastes other than regular tobacco, mint or menthol. The FDA recently announced a review of smoking teenagers and e-cigarettes, with Chief Official Commissioner, Scott Gottlieb, condemning an epidemic due to the availability of smoke-free products. Much of his anger has been directed against Juul Labs, who has marketed a range of online products with flavors such as "creme brulee" and "cool cucumber," which are high in nicotine and potent in young people.
See now: Adolescents do not seem to realize that these popular "creme brulee" e-cigarettes contain nicotine
Related: Why smoking among teenagers has reached historic lows
Gottlieb said Efforts to Convert Smokers to Less Harmful e-cigarettes should not be at the expense of younger people's health. The FDA plans to release its results next month and is considering a ban on flavored e-cigarettes and other restrictions on online sales.
"While we do not believe there is a current problem with adolescent access to our e-vapor products, we are taking this action because we do not want to take the risk," said Altria CEO Howard Willard, analysts said that he should discuss quarterly results after a FactSet transcript. "In addition, we will support federal legislation to set everyone as a minimum age for the purchase of tobacco products."
Read: Juuls Headquarters Is Being Overrun by the FDA
The company estimates that about 5% of adult tobacco consumers are under the age of 1
"We see Altria proactively deciding to remove MarkTen Elite & Apex pod products and restrict its cig-a-like product flavors until FDA's market regulation or clarity on access for adolescents is positive," said Wells Fargo analyst Bonnie Duke. She repeated her outperformance rating for the stock.
Willard disappointed these investors, who hoped that today's release would be accompanied by some kind of news about entering the cannabis sector. When asked to prepare plans, the CEO reiterated that the company was exploring possibilities in the room, arguing that cannabis may not always be banned at the federal level.
"I will spare myself to explain in more detail how we look at the category because we are relatively early in our exploration," he said.
Canada's efforts to fully legalize cannabis for recreational use for adults, and the growing number of US states allowing it for either medical or recreational purposes, have sparked the excitement of creating a legal sector of billions worth of dollars. Beverage companies, in particular Constellation Brands Inc.
STZ, + 0.73%
have taken steps in this sector; Constellation has $ 4 billion in Canada's Canopy Growth Corp. and others should keep an eye on the sector.
For all coverage of MarketWatch on Canadian legalization, click here.
Tobacco companies are widely considered a natural supplement to the sector, but big players are suspicious of the federal law that continues to classify weeds as a List I drug and place it in the same category as heroin and cocaine. This prohibition has made it impossible for companies to have bank accounts with institutions that are federally secured and exclude them from the capital markets.
Altria's third quarter net income was $ 1.94 billion, or $ 1.03 per share, compared to $ 1.87 billion, or 97 cents per share, in the same period last year. Adjusted earnings per share were $ 1.08, ahead of the $ 1.06 $ FactSet consensus
Sales climbed from $ 6.73 billion to $ 6.84 billion, while sales were $ 6.84 billion Net sales were $ 5.99 billion. The FactSet consensus was $ 5.21 billion in revenue.
The Company revised its EPS forecast for the full year to a range of $ 3.95 to $ 4.03, compared to a consensus of $ 4.00
Stocks were empty in the early afternoon while they were in the year By 13% in 2018, the Dow Jones Industrial Average fell
DJIA, + 1.61%
has risen by 0.6% and the S & P 500
SPX, + 1,94%
Now reading: Marijuana stocks are finally recovering from a long streak of bad luck, but Aurora cannabis is falling again