UBS upgraded Altria Group, Inc. to Buy from Neutral on January 9, raising its price target to $63 from $61. The firm stated the key reason is that the worst of Altria's cigarette volume decline may be starting to fade.
UBS expects conditions to look better in 2026, supported by healthier industry volumes and more price investment that could help Altria hold its share more steadily. The firm also pointed to improving earnings visibility, which made the risk-reward look more attractive.
Cigarette volumes have been sliding for years. In Q3 2025, Altria's cigarette volumes fell 8.2% year over year. Over the first nine months of 2025, volumes were down 10.6%.
Altria has managed to keep its financial performance relatively steady, mainly by leaning on pricing. The company has consistently raised prices to offset weaker volumes. Many tobacco users do not quit just because prices go up. Some will trade down to cheaper options, but many stick with the same brand and absorb the increase.
At the corporate level, management's larger objective is to keep the business durable over the long term. The company remains committed to returning a meaningful share of profits to shareholders. It targets a payout ratio of roughly 80% of adjusted earnings per share and has increased its dividend for 56 straight years.
Altria Group, Inc. is a US-focused tobacco company operating as a holding company, with business lines centered on the manufacture and sale of cigarettes and other products.