Morgan Stanley cut its estimates and target onPhilip Morris (MO ).
Analyst David Adelman says recent data shows that the tobacco manufacturer is sequentially gaining modest market share. However, he notes this is coming at a very significant cost: Higher marketing spending. Adelman says despite higher promotional spending, the share of sales of deeply discounted cigarettes has continued to increase moderately. He thinks 2003 will likely get off to a slow start, and that the share repurchase pace will significantly slow.
Adelman continues to feel it will take longer than expected for market conditions to normalize. He cut his $4.75 2003 earnings per share estimate to $4.65, and cut the $50 target to $48. He maintains his overweight rating.