Altria (MO) showed solid profit momentum and visibility from the double-duty drawback going forward, but structural headwinds persist, Morgan Stanley said in a Friday note.

The report said the company reported a "solid" Q1 EPS beat and reiterated its full-year 2026 guidance, adding that it has a balanced risk/reward profile from here.

"We see limited scope for upward re-rating," the note said, pointing to its recent stock appreciation amid solid financial flexibility from its stake in Anheuser-Busch InBev, $5.6 billion of capital losses, and some 6% dividend yield.

Additionally, the report said its limited reduced-risk portfolio is unlikely to move the needle for the company over the mid-term.

The report also said Altria has not witnessed an impact on tobacco consumer behavior from higher gasoline prices since the start of the Iran conflict, with consumer spending currently cushioned by higher tax refunds.

Morgan Stanley increased its price target to $71 from $62 while retaining its equal-weight rating on the stock.

Price: 73.36, Change: +0.70, Percent Change: +0.97