Several tobacco issues hit new lows, including R.J. Reynolds Tobacco Holdings Inc., British-American Tobacco Plc and Loews Corp. Shares of the world's No. 1 tobacco company, Philip Morris Cos. Inc., topped the most actives list on the New York Stock Exchange with about 6.4 million shares trading. The maker of top-selling Marlboro cigarettes was up 1/4 at 22-9/16 after falling on Monday, but the stock continues to hover near its all-time low of 22-1/8. ``These stocks have been punished twice before,'' Morgan Stanley Dean Witter analyst David Adelman said, referring to the dives the stocks have taken on litigation concerns in recent months. ``It's overkill already.'' ``It's a total overraction,'' Credit Suisse First Boston analyst Bonnie Herzog said. The analysts said they were surprised by the court's decision not to review the case, Engle vs R.J. Reynolds et al. This summer, in the first sick-smokers class-action lawsuit to result in a verdict against the tobacco industry, a six-member jury ruled that cigarette makers were liable for ailments ranging from cancer to heart and lung disease among thousands of Florida smokers. The suit is now in its second phase, during which the same jury must determine the amount of damages. Some observers estimate these could range from $300 billion to $500 billion. The industry is fighting the trial court's decision to allow the jury to award damages in a lump sum, rather than on a case by case basis. The companies and their investors were optimistic in early November when the Florida Supreme Court asked each party to submit briefs on the damages issue. At the time, the request was seen as a possible indication that the high court would review the case and throw out the lump-sum damages format. On Monday, however, the court refused to take up the case, and analysts agree that it is almost certain that the companies will face huge damages. The court did leave open a chance for a later appeal, though. ``This was definitely unexpected. We all expected the Florida Supreme Court would review the case,'' CS First Boston's Herzog said. ``It was disappointing and it's puzzling because the court took the unusual action of indicating it might rule on the issue,'' Morgan Stanley's Adelman said. ``The vast majority they just reject out of hand. Here they went over the threshold. To rule and not address the merits is puzzling.'' On the NYSE, Reynolds, No. 2 in the United States and maker of Camel, Winston and Salem cigarettes, hit an all-time low of 16, and Loews, whose Lorillard Tobbaco Co. makes the Newport brand, sank as far as 58-1/2, a 12-month low, before staging a slight recovery. Loews was down 1-1/4 at 59-1/4 in early afternoon action. On the American Stock Exchange, shares of British-American Tobacco, parent of No. 3 U.S. tobacco concern Brown & Williamson Tobacco Corp. also touched a 52-week low of 10-3/16 early in the day. In early afternoon trading the stock was off 1/4 at 10-9/16. CS First Boston's Herzog said she expects the stocks to remain in a tight trading range over the next two to three months until the Engles' damages phase is completed. But, she said, ``The short term risk-reward ratio (for investors) is attractive because the stocks' down side is limited.'' On Philip Morris, for instance, Herzog and Adelman said the market already has virtually eliminated all value of the tobacco side of the business from the stock's price. Philip Morris also owns Kraft Foods, Miller Beer and an investments operation, which themselves ought to warrant a stock price of $24 to $27 before adding back the tobacco operations, the analysts said. ``It's trading on the value of global Kraft Foods, Miller and Philip Morrs Capital,'' Herzog said. ``The market has bankrupted the value of tobacco.'' Adelman, however, said it's hard to place an independent value on the non-tobacco operations in an environment in which Philip Morris has no realistic opportunity to spin them off.

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