Analyst David Adelman says recent data shows that the tobacco manufacturer is sequentially gaining modest market share. However, he notes this is coming at a very significant cost: Higher marketing spending. Adelman says despite higher promotional spending, the share of sales of deeply discounted cigarettes has continued to increase moderately. He thinks 2003 will likely get off to a slow start, and that the share repurchase pace will significantly slow.
Adelman continues to feel it will take longer than expected for market conditions to normalize. He cut his $4.75 2003 earnings per share estimate to $4.65, and cut the $50 target to $48. He maintains his overweight rating.