Jefferies Upgrades Altria Group Stock on Vapor, Cannabis Tailwinds

Is it time to buy options now?

Jefferies upgraded MO to “buy” from “hold”

Tobacco stock Altria Group Inc (NYSE:MO) is in the spotlight today, after an upgrade from Jefferies to “buy” from “hold.” The firm also raised its price target to $58 from $40, citing the company’s underappreciated moves into vapor and cannabis, and noting the long-term potential decline of smoking. At last look, MO was up 0.9% to trade at $50.67 ahead of the opening bell.

On the charts, Altria Group stock is recently removed from its March 22 annual high of $51.72. After breaking past pressure at the $44 level in mid-February, MO enjoyed a consistent climb with help from its 20-day moving average. Year-to-date, the security is up 22.4%. 

Coming into today, analysts were split on Altria Group stock. Of the 11 in coverage, six carried a “buy” or better rating on the equity, with five recommending a tepid “hold.” Meanwhile, today’s positive price action has MO inching toward its 12-month consensus price target of $51.14. 

The options pits lean bullish, per MO’s 50-day call/put volume ratio of 4.15 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 76% of readings from the past year, indicating a healthier-than-usual appetite for long calls over the last 10 weeks.

Plus, these premiums are attractively priced at the moment. The stock’s Schaeffer’s Volatility Index (SVI) of 21% stands higher than just 3% of all other readings in its annual range, implying options players are pricing in relatively low volatility expectations at the moment. 

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