Lorillard Boosts Prices on Newport

Source from:  bizjournals.com September 25, 2007  09/26/2007

Lorillard Inc. became the third big cigarette producer to implement a price increase, adding a nickel a pack to its Newport brand, according to a Wall Street analyst. Greensboro-based Lorillard Inc. (NYSE: CG) is the third-largest cigarette maker in the country. Citibank tobacco analyst Bonnie Herzog said the price increase, effective Tuesday, follows actions in the last couple of weeks by Winston-Salem-based Reynolds American Inc. (NYSE: RAI) and Altria Group Inc.'s (NYSE: MO) Philip Morris. Reynolds American is the country's No. 2 cigarette maker and giant Altria the No. 1 manufacturer. The price increase, Herzog wrote in a note to investors Monday, bodes well for the cigarette makers. "Overall, we find these pricing actions positive since it indicates to us that the industry still has some pricing power," she wrote. "Furthermore, it suggests that even in the face of a potential federal excise tax increase (which we believe is likely) pricing power exists." Congress this week is expected to send a bill to the president that would raise the federal excise tax on cigarettes from 39 cents to $1 to increase funding for the politically popular State Child Health Insurance Program. President Bush has threatened to veto that bill, but many, including Herzog, believe there are enough votes in Congress to override the veto, meaning cigarette taxes could rise dramatically in the next few months. Herzog maintained her hold rating on Lorillard stock and reiterated her target stock price of $75 per share. The stock closed at $77.28 Monday. Enditem