Altria Group (MO) smokeable volumes continue to outperform the industry, helped by a portfolio strategy that captures trade-down while keeping value-conscious smokers in the Marlboro family, Needham said in a Friday note.
Adjusted cigarette volumes declined 4% versus a 5% industry decline, the analyst said. Marlboro's share of premium increased 0.4 percentage points sequentially to 60%, helped by Cowboy Cut, while Basic gained 0.3 points to 3.2% of the discount segment, the note said.
The stronger volume performance helped the company raise its fiscal 2026 adjusted EPS guidance to $5.66-$5.74 from $5.61-$5.72, with Needham's $5.70 estimate now at the midpoint.
The firm cautioned that fiscal 2027 presents a more difficult setup, citing tougher volume comparisons and reported shipments that have outpaced adjusted volumes by about 1.2 percentage points year to date. Pricing could offset some pressure, as this year's volume strength has likely left room for rate increases.
On! shipments are expected to benefit in Q4 from new flavor launches following the national rollout of 12 mg offerings. Shipments are likely to remain disconnected from scan trends near term, according to the note.
Needham reiterated its hold rating.
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