Shares of Altria Group Inc. continued to fall in premarket trade Monday, in the wake of a new Food and Drug Administration proposal to lower nicotine levels in cigarettes, with RBC Capital warning investors not to buy the dip. The stock fell 1.8% ahead of the open, after plunging 9.5% on Friday, which was the biggest one-day tumble since November 2008. RBC analyst Nik Modi upgraded Altria to sector perform from underperform but kept his stock price target at $62, which was 7.4% below Friday's closing price of $66.94. Modi said large regulatory price shocks have in the past 20 years created buying opportunities, but he believes this time is different. Among his concerns, Altria is not a buyout candidate, valuation is only "fair," fundamentals remain under pressure following disappointing second-quarter results and "we are not going to make a leap of faith" on the launch of the company's new smokeless cigarette product IQOS in the U.S. given limited visibility on regulatory issues. The stock has lost 1.0% year to date through Friday, while the SPDR Consumer Staples Select Sector ETF has gained 7.0% and the S&P 500 has climbed 10.4%.
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