Shares of Atria Group tumbled below an important chart level Wednesday, after an analyst initiated coverage of the stock with a sell rating. The same analyst called British American Tobacco the top pick in the industry.
Jefferies analyst Edward Mundy initiated coverage of Altria Group with an underperform rating and a 50 price target on Wednesday, according to Dow Jones Newswires and TheFly.com.
The analyst estimates global nicotine sales growth will be in the low-single digits from combustibles and next-generation products. He cited structural headwinds and a "demanding valuation" for the bearish view on Altria.
Jefferies is, overall, positive on the global tobacco industry. The firm puts tobacco among its favored consumer staples segments along with beer and consumer health, per TheFly.com. IBD's tobacco industry group is ranked a strong No. 16 out of 197.
Louisville, Ky.-based Turning Point Brands is the No. 1 stock in the group, with a 98 Composite Rating. Altria stock slid 4% in afternoon trading Wednesday, piercing its 50-day moving average in heavy volume. Altria shares are on track for their worst day since March 22, 2024, when they fell 4.4%, according to Dow Jones Market Data.
British American Named Top Tobacco Pick
The stock is still forming a flat base, but the sell-off damages the pattern. The relative strength line was already trending lower before today's stock tumble.
Jefferies put a buy rating on British American Tobacco. U.S.-traded shares were up 1.8% to 48.80 in moderately higher volume. The stock is up 34% year to date, near seven-year highs after finding support near the 10-week moving average last week.
The analyst named British American its top pick in the sector, TheFly.com reported.
Mundy initiated coverage of Philip Morris with a buy rating and 220 price target, Dow Jones reported. Philip Morris shares fell 0.6% in light volume and are testing support at the 50-day moving average. The stock is up 47% this year, most of it coming from a breakout after its Feb. 6 earnings report.
British American stock has a 21-day average true range (ATR) of 1.61%. The average true range is a metric in IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Philip Morris has a 21-day ATR of 1.76%. Altria has an ATR of 1.52%.
