No Ugly Death Labels For Cigarette Packs (MO, RAI, LO)

Altria Group, Inc. (NYSE: MO), Reynolds American Inc. (NYSE: RAI), and Lorillard, Inc. (NYSE: LO) are probably happy with a court ruling.  The tobacco firms are not going to have to attach those ugly images on their cigarette packages showing rotting teeth, dead bodies, and oral cancers.  This was already known for the most part, but this finalizes the victory.

A press release today noted, “As anticipated, Judge Richard Leon of the DC District Court ruled this afternoon that the Food and Drug Administration’s required graphic warning labels violate the First Amendment rights of the tobacco companies, constituting “compelled speech.” Siding with Big Tobacco, Leon ruled the images were “neither factual nor accurate.” The bizarre finding contradicts what we have known for decades – that between one-half and one-third of those who continue to smoke will ultimately die from it.”

This battle is far from over, but for now it is a win for tobacco companies.

Lorillard hit a 52-week high of $132.61 today.  Both Altria and Reynolds are back to within striking distance of their 52-week highs as well.  We remain concerned that the valuations versus the income streams for dividends are going to cross with price-hike pressures as case volumes continue to face pressure.

JON C. OGG