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Pro Analysis

Bank of America upgrades US cigarette maker Altria to buy on Trump's economic agenda

Cigarettes
Daniel Acker | Bloomberg | Getty Images

Bank of America Merrill Lynch on Wednesday upgraded Altria to buy from neutral, citing a plethora of positive catalysts that could take the shares of the U.S. cigarette maker higher in 2017.

"Given the incoming administration's priorities (tax reform) and the strength of the U.S. economy (lower unemployment, higher wages, improved disposable income, rising consumer confidence), along with MO specific catalysts (possibility of iQOS [smokeless cigarette] commercialization in the U.S. market, faster growth from beer equity income and buybacks), we are lifting our rating on Altria Group," equity analyst Lisa Lewandowski wrote in a note to clients.

She notes that 2016 proved to be another strong year for domestic tobacco stocks, and that trend is likely to carry through 2017.