Back to top

Analyst Blog

Tobacco maker Altria Group Inc.’s (MO - Analyst Report) subsidiary, Philip Morris USA (PM USA) received a favorable ruling in a case filed by the plaintiffs, way back in Jun 1997 in the California Superior Court. The plaintiffs claimed that PM USA has violated California’s Unfair Competition Law and False Advertising Law by using terms like “Lights” and “Lowered Tar and Nicotine” on its Marlboro cigarette packages and therefore claims that the company should pay the clients who bought Marlboro Lights between 1998 and 2001.

However, the judge ruled that the plaintiffs were ineligible to receive any money  as they could not prove having suffered any loss by smoking the cigarettes.

The judges’ ruling, if upheld, will help the tobacco company gain reputation and boost its sales amid several anti-tobacco campaigns and restrictions imposed by governments around the world.

In a separate development in August, PM USA won a case in the Non-Participating Manufacturer Adjustment (NPM Adjustment) dispute related to the NPM adjustment provisions of the Master Settlement Agreement (MSA). The agreement was inked between 46 states and major tobacco players, including Altria, Reynolds American Inc. (RAI - Analyst Report), Philip Morris International Inc. (PM - Analyst Report) and Lorillard Company (LO - Analyst Report).

The dispute arose over the amount that these tobacco companies had to pay to the state governments. The tobacco manufacturers argued that they lost market share in these states to other local cigarette makers who did not enter the agreement. Also, at least 15 states had failed to diligently collect escrow payments from manufacturers that did not sign the 1998 agreement. This failure entitled participating manufacturers to lower payments.

The cigarette makers won against six of the 15 states. The panel ruled that those states who failed to enforce escrow payments laws would not be entitled to collect the payments from tobacco manufacturers either. Altria, which currently carries a Zacks Rank #4 (Sell), revised its guidance upward to reflect the financial benefit from the lower MSA payment.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%