The Trump administration had argued the president has wide-ranging authority over national security matters.Politicsread more
Sen. Bernie Sanders will announce a plan Monday to forgive the country's $1.6 trillion outstanding student loan tab, intensifying the higher education policy debate in the...Personal Financeread more
Nineteen billionaires released a bipartisan letter on Monday asking the 2020 presidential candidates to support a tax on the American families with the largest fortunes.Economyread more
The major indexes have stretched to all-time highs and are riding one of their best first halves in decades.Trading Nationread more
Six women are running for president. Five of them are career politicians. Then there's Oprah-approved self-help guru Marianne Williamson.2020 Electionsread more
As candidates from Elizabeth Warren and Bernie Sanders to John Delaney jockey for position in the 2020 Democratic primary, business issues will come up in the first debates.2020 Electionsread more
McDonald's said Monday that it gained market share in the informal eating out category for the first time in five years, thanks to its nationwide launch of fresh beef.Restaurantsread more
The brokerage says that the globe is "one step away" from recession as the world's two largest economies head to the G-20 summit.Marketsread more
President Trump issues an executive order that would pressure insurers, doctors and other providers to disclose more information about health-care prices.Health and Scienceread more
J.P. Morgan analyst Stephen Tusa is sticking to his guns when it comes to General ElectricInvestingread more
The planet of Batuu is now open to all Disneyland guests, but that doesn't mean visiting this galaxy far, far away is going to be easy.Entertainmentread more
The Food and Drug Administration's tobacco and nicotine regulation announcement clobbered tobacco stocks on Friday. Despite the initial beating, the plan might not crucify tobacco stocks and could actually benefit two companies, Cowen said in a note to investors Tuesday.
The FDA will start the process of seeking to lower nicotine in cigarettes to non-addictive levels, reviewing flavors — including menthol — in tobacco products, and considering a delay in implementing new rules for reduced-risk products like e-cigarettes.
Philip Morris International, which sells Marlboro and other brands outside the U.S., and Turning Point Brands, which sells Zig Zag rolling papers, could gain from the FDA's plan, Cowen said. Neither company is at risk from cigarette initiatives, and both companies are positioned for boosts to their e-cigarette products.
The rest of the industry is not as insulated as Philip Morris and Turning Point, but Cowen does not think it is doomed. The firm predicts the plan could have neutral or have a negative impact on companies at first, but the long-term effects would be mostly mixed.
"Ultimately ... we think that the pace of regulatory change will be slow, but that there's potential for a change in consumer perception that could mirror what we saw in the U.S. in the 1950's and 1960's," Cowen wrote.
In the long-run, Altria and British American Tobacco's menthol products put the companies at risk, Cowen wrote, but growth in other areas could offset that. Imperial Brands could be at a competitive disadvantage because it has limited exposure to vapor and no heat-not-burn cigarettes, Cowen said. Japan Tobacco could benefit from a U.S. market that is friendlier to reduced-risk smoking products, Cowen wrote, but its PloomTech tobacco vaporizer is still in its early stages.
Cowen does not expect regulatory changes to put tobacco company earnings at risk until at least 2019. The bigger risk, Cowen wrote, is media coverage, company messaging and public perception.
"That is the single biggest risk/opportunity today: how is this messaged and how will consumers respond?" Cowen wrote. "While the companies are limited in the claims that they can make, they are capable of leaning in on (reduced-risk products) to drive a change in consumer perception and behavior."
The cigarette market underwent disruption even before the infamous 1964 Surgeon General's warning because the media started questioning how healthy cigarettes were, Cowen said. Major cigarette brands lost market share in the 1950s to smaller brands thanks to the popularity of filtered cigarettes, according to Cowen's report.
One such product, Marlboro, had been gaining momentum in the 1950s. That accelerated upon the infamous 1964 report. Cowen speculates Marlboro's smokeless cousin, iQos, could benefit from a similar disruption that Marlboro enjoyed.
The FDA's plan could create an opening for e-cigarettes, but it could also boost cigarette consumption, Cowen said, citing a 2010 University of Minnesota study.
"Indeed, in assessing the usefulness of reducing nicotine levels in cigarettes, we need to consider the unintended consequences that mildly reducing nicotine levels may lead to higher per capita consumption as smokers look for an offset," Cowen wrote.
The FDA said Friday it will initiate a public dialogue on lowering nicotine levels and it plans to issue guidance describing a new enforcement policy shortly.