Altria could partner with Philip Morris on JUUL stake, says Piper Jaffray

Even after its $1.8B investment in Cronos Group (CRON) for a 45% ownership interest, Altria Group (MO) still has “significant” spending flexibility, Piper Jaffray analyst Michael Lavery tells investors in a research note. The company remains focused on e-vapor category leadership, suggesting it may be preparing to acquire a stake in JUUL, adds the analyst. However, Altria will likely remain committed to its investment grade debt rating, which could cause it to consider partnering with Philip Morris (PM) for a stake in JUUL, especially if a deal is done at higher valuation levels, says Lavery. The analyst believes Altria can deliver double-digit earnings growth over 2018-2020, above its long-term 7%-9% growth target, driven by pricing, tax savings, managing spending, share buybacks and falling interest expense. He keeps an Overweight rating on the shares with a $75 price target.
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