Deutsche Bank: Have MO and RAI Reached Their Full Value?

Deutsche Bank has downgraded Altria Group (NYSE: MO) and Reynolds American (NYSE: RAI) to Hold due to limited upside potential from current price targets.

In its tobacco industry research report, Deutsche Bank writes "Share price outperformance rightly owes to favorable domestic fundamentals - stable pricing, improving volume, manageable legal risk, attractive cash return. But valuation near the high end of historical cash flow multiples suggests a more balanced risk/reward. We are moving to the sidelines on Altria and Reynolds owing to limited upside to our target prices, which remain unchanged."

Altria Group closed yesterday at $24.25 while Reynolds American closed at $59.92.