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Altria shares defy vaping crisis

By Lawrence Gash

Tobacco giant starts recovery from Juul drop

Tobacco giant Altria’s (MO) stock has gained throughout the week, as the company behind the Philip Morris brands in the USA emerges from its lowest position in five years.

The company has struggled after its $12.8 billion investment in electronic cigarette company Juul left it vulnerable to concerns about the safety of vaping. A spate of reports of lung diseases tied to vaping have resulted in negative press, along with accusations that Juul specifically targeted schoolchildren in its advertising.

Altria stock, at $44.28 (£34.20) before markets opened, was at its highest point for the past month, far off the company’s all time high of $77.28 in 2017. Wells Fargo analyst Bonnie Herzog rated the shares at Outperform. She said this week that the e-cigarette scandal might increase traditional cigarette sales and added that cigarette sales volume in the four-week period ending on October 5th showed a reduction in the rate of decline compared to the previous three months.

The vaping scandal is thought to have played a role in the failure of merger talks between Altria and Philip Morris International last month.

The Centre for Disease Control and Prevention (CDC) has now recorded almost 1,500 cases of lung injury caused by vaping. The majority of these came from the use of poorly manufactured Tetrahydrocannabinols (THC) products, not Juul products, but the e-cigarette firm’s CEO, Kevin Burns, stepped down in the midst of the uproar.

Juul has now agreed to restrict youth advertising and to suspend sales of the fruit flavoured pods that are believed to be most appealing to children. Juul has reportedly lost 30 per cent of its value.

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