Reynolds American, Inc. (NYSE:RAI) investors cheer the news that the cigarette maker has received a non-binding proposal from British American Tobacco p.l.c. (BAT) to purchase the approximately 58 percent of RAI common stock that BAT does not currently own. The RAI board of directors, consistent with their fiduciary duties, will evaluate the offer from BAT and respond accordingly
Reynolds American shares reacted to the news, rising nearly 15% to $54.38 in early trading Friday. RAI has a 1-year high of $54.48 and a 1-year low of $43.38. The stock’s 50-day moving average is $47.71 and its 200-day moving average is $49.40.
On the ratings front, Reynolds American has been the subject of a number of recent research reports. In a report released yesterday, Jefferies analyst Owen Bennett reiterated a Buy rating on RAI, with a price target of $62, which represents a potential upside of 31% from where the stock is currently trading. Separately, on the same day, Cowen’s Vivien Azer reiterated a Buy rating on the stock and has a price target of $57.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Owen Bennett and Vivien Azer have a total average return of 1.5% and 17.5% respectively. Bennett has a success rate of 25% and is ranked #2291 out of 4183 analysts, while Azer has a success rate of 87.5% and is ranked #276.
The street is mostly Bullish on RAI stock. Out of 7 analysts who cover the stock, 4 suggest a Buy rating and 3 recommend to Hold the stock. The 12-month average price target assigned to the stock is $54.00, which implies an upside of 14.5% from current levels.
Reynolds American Inc. is a holding company, which manufactures and sells cigarettes in United States. The company operating segments include RJR Tobacco, American Snuff and Santa Fe. The RJR Tobacco segment consists of the primary operations of R. J. Reynolds Tobacco Company. The American Snuff segment consists of the primary operations of American Snuff Co. The Santa Fe segment consists of the primary operations of SFNTC, Niconovum AB, Niconovum USA, Inc. and RJR Vapor.