Morgan Stanley today...
Any comments on this drastic appraisal of tobacco's prospects...?
Morgan Stanley warns on the future of tobacco
Jun. 17, 2019 2:25 PM ET|About: British American Tobacco ... (BTI)|By: Clark Schultz, SA News Editor
Morgan Stanley sees the potential for the profitability of major tobacco companies to be reduced by as much as 50%if the FDA adopts a "maximum nicotine" rule within the next 15 years, a risk it thinks isn't fully baked into share prices across the industry.
"Reducing nicotine in cigarettes to non-addictive or minimally addictive levels, in our view, would be a potential game changer for the U.S. industry," warns the firm.
Morgan Stanley has Imperial Brands (OTCQX:IMBBY -1.4%) and Altria (MO +0.4%) rated at underweight and drops British American Tobacco (BTI -1.3%) to the same bearish stance.
The long-term view from Morgan Stanley on tobacco is dim even with the max nicotine law off the table. MS forecasts the number of adult smokers in the U.S. to fall from 34M (~13% of population) in 2018 to 14M by 2030 (~5%) and then to less than 1% of the adult population by 2050.
Related: Philip Morris International (PM +1.7%), Juul (JUUL), Vector Group (VGR +2.6%).