In a report released today, Ian Zaffino from Oppenheimer downgraded Vector Group (NYSE: VGR) to Hold. The company’s shares closed yesterday at $13.52, close to its 52-week low of $13.34.
Zaffino noted:
“We downgrade shares of Vector, owing to an increased risk to the dividend, in our opinion. For some time, we have highlighted the dividend is largely underfunded and should be viewed partly as a “return of capital”, yet the company has the cash, assets and motivation to continue the payment for numerous years. However, the recent decline in the stock price—driven by peer multiple compression, soft NY real estate and its largest shareholder’s SEC troubles—has created an unusually high dividend yield. With no clear path to fully fund the dividend with organic cash flow, the company could use this opportunity to lower the dividend and the associated yield. Owing to this potential risk, we lower our rating to and remove our $27 price target.”
According to TipRanks.com, Zaffino is a 4-star analyst with an average return of 2.7% and a 52.8% success rate. Zaffino covers the Services sector, focusing on stocks such as Servicemaster Global Holdings, Wyndham Destinations Inc, and Peak Resorts.
The the analyst consensus on Vector Group is currently a Hold rating.
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Based on Vector Group’s latest earnings release for the quarter ending June 30, the company reported a quarterly net profit of $16.13 million. In comparison, last year the company had a net profit of $17.77 million.
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Vector Group Ltd. operates as a holding company, which manufactures and sells tobacco products. It operates through the following segments: Tobacco, E-Cigarettes and Real Estate. The Tobacco segment consists of the manufacture and sale of cigarettes. The E-Cigarettes segment includes the operations of the company’s e-cigarette business.
