Replay: Long Lorillard (LO): Best Idea Call

Earlier today we hosted a conference call to discuss the key points of our high-conviction bullish thesis on Lorillard (LO). 

Podcast: CLICK HERE

Presentation: CLICK HERE

 

Key Takeaways Of The Call

  • We do not see Menthol Regulation Risk from the FDA over the medium term (1-2 years) and assign less than a 20% probability over the long term.
  • We expect blu e-cigs to benefit from first mover advantage and maintain leading market share despite competitive pressures from Big Tobacco’s entry into the category. Looking out 5 years to 2018, we model blu’s earnings contributing 31% to total LO, and accelerating earnings growth in the combined company that should command a re-rating of the stock to a higher multiple.
  • We expect strong and stable menthol fundamentals driven by lasting consumer and demographic trends that differ from traditional tobacco.

*A supplemental expert report on menthol by a top Washington, DC law firm involved in tobacco public policy is available by request.

Call or email me with any follow-up questions.

Best,

Matt Hedrick