Deutsche Bank downgraded Altria (NYSE:MO) to a Hold rating after having it set at Buy. The firm said it sees limited upside potential for shares at their current level due to some near-term challenges. 

The downgrade also reflects uncertainties surrounding Altria's (NYSE:MO) NJOY litigation. In January, the U.S. International Trade Commission ruled that NJOY ACE e-vapor products infringe on four Juul Labs patents, and issued Limited Exclusion Orders and Cease and Desist Orders prohibiting imports and sales of NJOY ACE until patent expiration in 2034 and 2037. As a result, Altria (MO) can no longer sell NJOY products in the U.S., meaning NJOY revenue is expected to decline significantly from Q2 onwards.

Looking ahead, Altria (MO) has potential paths forward, including appealing the ITC judgment in federal court, negotiating a settlement with Juul, or pursuing FDA approval for NJOY through Substantial Equivalence exemptions. 

Due to the potential earnings wildcards, Altria (MO) is seen by the Deutsche Bank analyst team as fairly valued at trading multiples of 11.3X PE and 6.9X EV/EBITDA for fiscal year 2025.

Deutsche Bank assigned a price target of $60 on Altria (MO).