Merrill Adds Altria Group To Its Focus One List
Corrected November 7, 2003 15:18 ET (20:18 GMT)
DOW JONES NEWSWIRES
By Adam L. Freeman
Of DOW JONES NEWSWIRES
NEW YORK -- Altria Group Inc. (MO) could spin off its global food group in 2004, a move which could significantly boost the value of its non-tobacco units, according to a Merrill Lynch & Co. analyst, who Friday added the company to the firm's Focus One list.
In a research note issued Friday, Martin Feldman said the stock should rise to $63 within 12 months, predicated primarily on his belief that the company's board "may elect to spin off its global food unit during the later part of 2004." The transaction "could boost the stub value of Altria's non-tobacco units to $40.65 from the current $24.95."
However, before the spin-off can occur, according to Feldman, a Department of Justice as well as an Illinois class action suit will have to be won by the tobacco industry. Both cases could be won by Altria by mid-2004, he said.
By March, Altria could be free of debt, enabling it to reinitiate its stock buyback program, according to the analyst, whose 2004 earnings estimate of $4.81 a share envisages the company's buyback resuming by mid-2004 at $3 billion on an annualized basis.
"Given, however, the group's cash flows and falling debt levels, a larger buyback, from as early as February or March, remains possible," said Feldman , who kept his rating at buy.
Feldman owns no share of Altria, but his firm has a recent investment banking history with the company.
Altria shares recent changed hands up 2%, or $1.05, to $48.35, on volume of 534,000 shares, compared with average daily volume of 6 million. |
