Sector Update: Consumer

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Consumer stocks were ending moderately lower Wednesday with shares of consumer staples companies in the S&P 500 about falling about 0.1%. Shares of consumer discretionary firms in the S&P 500 were down 0.4%.

In company news, shares of Lorillard Inc. ( LO ) declined Wednesday, falling for a second day following an 8% gain earlier this month amid speculation Reynolds American ( RAI ) may be positioning itself for buyout of the rival cigarette-maker.

The Financial Times last week reported RAI had hired Lazard to assist with a potential LO buyout, suggesting a $20 billion pricetag was possible. But analysts at Citigroup earlier this week threw some cold water on that speculation, saying a deal was unlikely because of prospective anti-trust concerns.

Wells Fargo Securities analyst Bonnie Herzog suggests RA could eventually offer as much as $80 a share offer, provided they are able to find sufficient cost-savings in the combined companies.

She sees synergies could generate around $400 million in cost savings - equal to 8% of LO revenue - adding they would likely close either LO's or RA's manufacturing facility following a deal, "which makes sense given we expect cigarette volume declines to accelerate as e-cigs continue to displace volume," Herzog wrote.

LO shares were down 2.3% at $50.99 each in late trade while RAI was holding on to a 1 cent advance to $53.70 a share.

In other sector news,

(+) DMND, Q2 earnings of $0.09 per share, ex items, beats by $0.01. Revenue falls 0.1% year over year to $220.6 mln, topping Street view by around $3.93 mln.

(-) CZR, Q4 net loss widens from year-ago levels to $12.83 per share, trailing analyst forecasts for a $1.59 per share loss. Revenue rises 3.5% to $2.08 bln, also lagging Street view by around $30 mln.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: LO , RAI

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