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Wall Street investors are reportedly flooding back into tobacco stocks, erasing years of ethical boycotts as the industry’s aggressive pivot toward smoke-free products blurs old moral lines.For nearly a decade, pension funds and major endowments blacklisted cigarette makers under strict mandates.But that taboo is quickly going up in smoke.Tobacco companies generating massive sales from non-combustible alternatives are “rejoining polite society” and earning premium stock market valuations from returning institutional capital, the Wall Street Journal reported Thursday.The shift gained fresh momentum when the Food and Drug Administration gave the green light for Philip Morris to market 20 variants of its Zyn nicotine pouches as a less harmful alternative to traditional smoking.
The June 30 decision noted a reduced risk of lung cancer, stroke and heart disease for people who use the pouches, which go between one’s gums and cheek but don’t contain tobacco.The move came just weeks after New York Gov.Kathy Hochul signed a new 75% wholesale tax into law on alternative tobacco products — the so-called “Bro Tax.”Still, crossing the FDA’s regulatory moat prompted immediate action from major investment banks.
Morgan Stanley recently raised its price target on Philip Morris to $200, highlighting the upcoming rollout of Zyn Ultra.“The developments increase our confidence,” Morgan Stanley analysts wrote in a briefing to clients, adding that they see an increased probability for their $250 bull-case scenario as smoke-free alternatives dominate Philip Morris’ revenue.Bank of America similarly backed the stock, pushing its target to $209 on high-margin smokeless execution.Philip Morris generates about 41% of its sales from non-combustible products, the Journal noted, adding it now trades at a massive 70% premium over rivals still heavily dependent on sales of old-fashioned smokes.While Philip Morris has captured the premium valuations, rival British American...