reports
- Philip Gorham
- CFA
- FRM
Raising FVE of Reynolds American to $66 to Reflect Current Market Valu...
We are raising our fair value estimate of Reynolds American to $66 per share from $60 to account for the increase in the acquisition value of the company as a result of the continued rise in the market price of British American Tobacco. Reynolds is expected to be acquired by BAT in the third quarter of this year, and with 55% of the total consideration being paid in stock, the value of the deal is sensitive to the market value of BAT. Our valuation of Reynolds accounts for the current market val...
- Philip Gorham
- CFA
- FRM
Reynolds Reports In-Line Q4, but Performance of Newport Highly Accreti...
Reynolds American's full-year 2016 results were consistent with our forecasts and the trend that underlies our long-term assumptions. We think industry cigarette volumes will continue to decline in the 3%-4% range annually, but the brands and intangibles supporting Reynolds' wide moat will help it to outperform the industry while maintaining pricing power. We are maintaining our $60 fair value estimate and wide economic moat rating, and expect the acquisition by British American Tobacco to close...
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