Analysts at RBC Capital downgraded Altria Group, Inc. (NYSE:MO) to sector perform from outperform on stock outperformance and trade down risk.

The stock is up more than 20% since the beginning of December. The analysts believe the outperformance was driven by strong money flows into staples with a sector rotation towards defensive names given concerns on Fed rate hikes, geopolitical risks, and inflation. The company disproportionately benefited from the rotation given its limited exposure to cost inflation, US-centric business, and pricing power.

Post the strong stock performance, the analysts believe there is limited room for further outperformance and, thus, view a Sector Perform rating as more appropriate. The analysts mentioned they are worried about consumer trade down within cigarettes with high gas prices, given exposure to lower-income consumers.