Tobacco stocks are trading lower on Wednesday, after another blow from the Food and Drug Administration.
The FDA issued its Advanced Notice for Proposed Rulemaking (ANPRM) for characterizing flavors in tobacco products including menthol cigarettes, signaling its intent to regulate these, in both traditional and e-cigarettes. This follows on the heels of its proposed rule for nicotine in tobacco products, released just last week.
Altria (MO), Philip Morris (PM), and British American Tobacco (BTI) are all falling in recent trading, and the stocks are down 15.3%, 7.5%, and 18.5% since the start of the year, on worries about the FDA’s proposed moves, which first riled the sector last year.
By Stifel’s Christopher Growe’s count, the FDA is asking for information on 25 different areas regarding flavors, particularly focusing on youth initiation and on E-cigs. But he writes that the science “seems less well developed here and suggests a longer time frame for implementation.”
He also reiterated a Buy rating on Altria today, calling the weakness a buying opportunity, given its low valuation and generous dividend.
Altria is down 1.7% to $60.49 in recent trading, while Philip Morris is off 1.5% to $97.70, and British American Tobacc0 (BTI) is falling 2.2% to $54.47. The Consumer Staples Select Sector SPDR ETF (XLP) is losing 1% to $52.08.
