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.