Deutsche Bank Upgrades R.J. Reynolds to Buy

The FTC cleared the tobacco company's merger with a Brown & Williamson unit

Deutsche Bank upgraded R.J. Reynolds Tobacco (RJR ) to buy.

Analyst Marc Greenberg says the Reynolds-American approval was faster and easier than expected in a unanimous approval of his best case-scenario: "As-is/no brand divestitures." He notes RJR's statement indicates a July deal close pending shareholder approval, with IRS clearance as a tax-free merger.

Greenberg estimates the merged company can do $7.00 in 2005 EPS. He notes the speed of approval, and the steady domestic fundamentals, present potential upside to his $5.09 2004 EPS forecast, and heightens prospect of a current year dividend boost. He set a $75 target.

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