Altria Posts In-Line First Quarter; Shares Fairly Valued Following Rerating

Altria reported first-quarter results that were very close to our forecasts, and we retain our $52 fair value estimate. We remain comfortable with both our near-term estimates, which are at the midpoint of management's earnings guidance on an adjusted basis, and our long-term forecasts, which assume flat revenue and modestly eroding gross margins over time. After a rerating in the stock since late 2021, Altria is now trading at our fair value estimate. However, with its 10% interest in Anheuser-Busch InBev remaining materially below our estimate of intrinsic value, the implied expectations for Altria's core tobacco business now look slightly frothy.