Zacks Investment Research Upgrades Reynolds American Inc. (RAI) to Hold
Reynolds American Inc. (NYSE:RAI) was upgraded by Zacks Investment Research from a “sell” rating to a “hold” rating in a report issued on Tuesday.
According to Zacks, “Reynolds continues to deliver lower-than-expected top- and bottom-line results, which is quite evident from its third-quarter 2016 performance. However, what came as a respite that both earnings and sales rose year-over-year. Higher cigarette and moist snuff pricing coupled with strong performance across both smokeable and smokeless categories facilitated the growth. Following the results, Reynolds tightened its full-year guidance, and now projects earnings in the band of $2.27–$2.33 per share. Despite high excise tax and anti-smoking regulations, the Newport brand has been performing strongly, and the company is also focusing on smokeless and moist snuff products and other innovative products to retain its market share. Further, investors are curious if British American will bid higher to buy Reynolds American's remaining stake, after the rejection of initial bid.”
Several other research analysts also recently issued reports on RAI. Credit Agricole SA raised Reynolds American from an “underperform” rating to an “outperform” rating and upped their price objective for the company from $52.00 to $54.00 in a research note on Monday, August 8th. They noted that the move was a valuation call. Cowen and Company reiterated an “outperform” rating and issued a $57.00 target price on shares of Reynolds American in a report on Tuesday, August 16th. Morgan Stanley reiterated a “hold” rating on shares of Reynolds American in a report on Thursday, September 1st. Vetr upgraded Reynolds American from a “buy” rating to a “strong-buy” rating and set a $56.12 target price on the stock in a report on Thursday, September 8th. Finally, Goldman Sachs Group Inc. cut Reynolds American from a “buy” rating to a “neutral” rating and reduced their target price for the company from $56.00 to $53.00 in a report on Monday, September 12th. One analyst has rated the stock with a sell rating, four have issued a hold rating and nine have issued a buy rating to the company. Reynolds American currently has a consensus rating of “Buy” and an average target price of $56.56.
Shares of Reynolds American (NYSE:RAI) opened at 53.79 on Tuesday. The firm has a market capitalization of $76.69 billion, a P/E ratio of 13.98 and a beta of 0.36. Reynolds American has a 12-month low of $43.38 and a 12-month high of $56.65. The stock has a 50 day moving average of $50.84 and a 200-day moving average of $50.55.
Reynolds American (NYSE:RAI) last released its quarterly earnings data on Wednesday, October 19th. The company reported $0.61 earnings per share (EPS) for the quarter, missing the Thomson Reuters’ consensus estimate of $0.65 by $0.04. Reynolds American had a net margin of 44.47% and a return on equity of 15.13%. The firm earned $3.21 billion during the quarter, compared to analyst estimates of $3.31 billion. During the same period in the prior year, the company earned $0.55 EPS. The business’s quarterly revenue was up 1.4% compared to the same quarter last year. On average, equities research analysts predict that Reynolds American will post $2.30 EPS for the current fiscal year.
In related news, major shareholder American Tobacco P.L.C British sold 660,385 shares of the stock in a transaction on Wednesday, September 28th. The stock was sold at an average price of $48.03, for a total value of $31,718,291.55. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. Also, CEO Debra Ann Crew sold 10,818 shares of the stock in a transaction on Wednesday, October 26th. The shares were sold at an average price of $54.54, for a total value of $590,013.72. Following the completion of the sale, the chief executive officer now directly owns 41,835 shares of the company’s stock, valued at $2,281,680.90. The disclosure for this sale can be found here. 0.11% of the stock is owned by corporate insiders.
A number of large investors have recently added to or reduced their stakes in the stock. Capital Research Global Investors raised its stake in Reynolds American by 39.1% in the third quarter. Capital Research Global Investors now owns 32,092,980 shares of the company’s stock worth $1,513,184,000 after buying an additional 9,023,817 shares during the last quarter. Independent Franchise Partners LLP bought a new stake in Reynolds American during the third quarter worth approximately $117,419,000. Capital World Investors raised its stake in Reynolds American by 5.1% in the third quarter. Capital World Investors now owns 45,689,868 shares of the company’s stock worth $2,154,277,000 after buying an additional 2,200,500 shares during the last quarter. Prudential Financial Inc. raised its stake in Reynolds American by 155.4% in the second quarter. Prudential Financial Inc. now owns 2,951,808 shares of the company’s stock worth $159,191,000 after buying an additional 1,795,912 shares during the last quarter. Finally, BlackRock Fund Advisors raised its stake in Reynolds American by 15.0% in the third quarter. BlackRock Fund Advisors now owns 12,352,589 shares of the company’s stock worth $582,425,000 after buying an additional 1,607,471 shares during the last quarter. 46.97% of the stock is owned by institutional investors and hedge funds.
Reynolds American Company Profile
Reynolds American Inc (RAI) is a holding company. The Company’s segments are RJR Tobacco, Santa Fe and American Snuff. The RJR Tobacco segment consists principally of the primary operations of R. J. Reynolds Tobacco Company. The Santa Fe segment consists of the domestic operations of Santa Fe Natural Tobacco Company, Inc (SFNTC).
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