Altria: New U.S. Tax Proposal Would Protect Cigarettes, Buy
(Preview) Company Update (MO US) (Buy)
Summary
The latest U.S. budget proposal from House Democrats reinserted the "taxable nicotine" concept but left out other tobacco tax hikes.
If passed, it would mean significant tax increases for e-vapor and nicotine pouches, but no change for cigarettes and moist snuff.
The proposal would effectively protect U.S. cigarette sales. Altria would be a clear winner, while Swedish Match would be a clear loser.
The likelihood of the proposal happening is reduced by Senator Joe Manchin's opposition. This is a low-probability, high-impact risk.
We maintain our Buy rating on Altria, with an 8.0% Dividend Yield and a forecasted 21.0% annualized return, and on 3 other tobacco stocks
Introduction
We believe a new U.S. budget proposal released by House Democrats would protect cigarette sales and leave Altria a clear winner.
The U.S. Congress has been locked in budget negotiations for months, largely due to the Senate having just a single-seat Democratic majority (from the Vice President's breaking vote; t…