Salomon Cuts Tobacco Targets
Salomon Smith Barney downgraded the tobacco industry to marketweight from overweight, and cut its price target on Philip Morris (MO ), RJ Reynolds (RJR ) and Loew's Carolina Group (CG ).
Analyst Bonnie Herzog says the tobacco industry downgrade is based on a deterioration of fundamentals. She notes several of her recent concerns about the industry were confirmed by Philip Morris' recent earnings warning.
She cut Philip Morris' fourth-quarter earnings per share estimate to $0.93, and cut the $4.85 2002 estimate to $4.58. She maintains her outperform rating on Philip Morris, but believes the stock could trade in a tight range and be sluggish possibly through the end of the year. She cut her $68 Philip Morris target to $50.
Finally, Herzog reduced her $58 RJ Reynolds target to $48, and cut her $37 Loew's Carolina target to $28.