UBS Turns Bullish on Altria (MO) on Improving 2026 Industry Outlook

Core Viewpoint - Altria Group, Inc. is experiencing a potential turnaround in its cigarette volume decline, with UBS upgrading its rating to Buy and raising the price target, indicating a more favorable outlook for 2026 [2]. Group 1: Financial Performance - Altria's cigarette volumes fell 8.2% year over year in Q3 2025, and volumes were down 10.6% over the first nine months of 2025, reflecting a significant decline in the industry [3]. - Despite the declining volumes, Altria has maintained steady financial performance by leveraging pricing power, consistently raising prices to offset weaker sales [4]. - The company targets a payout ratio of approximately 80% of adjusted earnings per share and has increased its dividend for 56 consecutive years, showcasing a strong commitment to returning profits to shareholders [5]. Group 2: Industry Outlook - UBS anticipates that the worst of Altria's cigarette volume decline may be fading, with expectations for healthier industry volumes and price investments supporting a more stable market share in 2026 [2]. - The tobacco industry generally allows for price increases without significant loss of customers, as many users do not quit due to higher prices, which has contributed to Altria's resilience [4]. Group 3: Company Overview - Altria Group, Inc. operates as a holding company focused on the manufacture and sale of cigarettes and other tobacco products, primarily in the US market [6].