Altria made a big bet on vaping. Will it still pan out?

New York(CNN Business) The Trump administration is cracking down hard on the sale of flavored e-cigarettes. Health concerns and teen addiction have given regulators pause. That could be bad news for Altria, the US owner of the Marlboro brand and a top investor in vaping giant Juul Labs.

Shares of Altria (MO) fell slightly Thursday. So did the stock of Philip Morris (PM), the tobacco company that owns the rights to sell Marlboro and other cigarette brands overseas.

Altria disclosed last month that it was in talks to reunite with Philip Morris. The two companies split apart in 2007.

A deal would create an electronic cigarette and vaping giant. Philip Morris is the maker of iQOS electronic cigarettes, which heat tobacco and still contain nicotine. Altria already has a deal with Philip Morris to sell iQOS devices in the United States.

But the proposed plan by the FDA, unveiled Wednesday by Health and Human Services Secretary Alex Azar, to temporarily ban non-tobacco-flavored e-cigarette products such as mint and menthol, could make a merger harder to swallow.

Tougher regulations on e-cigarettes could come after well-publicized reports of health problems among people who vape.

The Centers for Disease Control and Prevention issued a strongly worded statement in support of the e-cig crackdown Wednesday.

"This is an important step in response to the epidemic of e-cigarette use among our nation's youth, and will help protect them from a lifetime of nicotine addiction and associated health risks," said CDC director Robert Redfield. "Clearing the market of non-tobacco-flavored products is important to reverse this alarming epidemic."

"We must do everything we can to reduce the use of e-cigarettes among middle and high school students," Redfield added.

Tobacco stocks up in smoke?

Investors are growing nervous about these new regulatory headwinds.

Jefferies analyst Owen Bennett cut his price targets for both Altria and Philip Morris Thursday, citing concerns about the FDA taking a hard look at Juul usage, particularly among teens.

"There is increasing public uproar around Juul and a desire for regulators to take some type of action. They have been the topic of negative headline after negative headline for the past 18 months," Bennett said in a report.

Concerns about a wider crackdown should have investors wondering if the Philip Morris-Altria reunification will actually take place, Cowen's Vivien Azer added in a report Thursday.

Even if Philip Morris isn't planning to pay top dollar for Altria, a deal may no longer be viable, Azer noted.

"Why would Philip Morris want to even strike a no-premium deal, when they're buying an asset with a murky fundamental outlook?" she said.

A spokesperson for Altria told CNN Business that "we agree that urgent action is needed and we look forward to reviewing the guidance. Reducing youth use of e-vapor products is a top priority for Altria." The company did not address what the FDA guidance means for a possible Philip Morris merger. Philip Morris was not immediately available for comment.

Concerns about Juul weakness overblown?

But one analyst isn't too concerned that the possibility of stricter rules on underage vaping will kill an Altria-Philip Morris deal.

Bonnie Herzog of Wells Fargo Securities said in a report that raising the minimum purchase age for e-cigarettes to 21 would be a smart idea that the tobacco industry would likely support.

Herzog also noted that Juul already agreed to remove many flavored products from stores last November.

And you'd have to think Altria still wants a merger to happen. Its shares are down more than 10% this year while Philip Morris stock is up 12% in 2019.

Altria is trying to adapt to a world where people aren't smoking traditional tobacco as much. It bought its nearly 35% stake in Juul last year for about $13 billion. Altria also owns a 45% stake in Canadian cannabis company Cronos (CRON) and it is a significant investor in beer giant Anheuser-Busch InBev (BUD).

Still, Stifel analyst Christopher Growe argues that even if there is a further crackdown on Juul, Altria may benefit from people potentially moving back towards traditional tobacco cigarettes.

In other words, it may not be the worst thing in the world for Altria to ultimately scale back on its vaping ambitions.

Alttia's Juul stake "has been seen as a boon or an albatross at any given time in the past nine months. We believe its value has to be lower due to the mounting pressure, both legal and regulatory," Growe said in a report.

"We believe the headlines, if anything, are positive for Altria — further regulation of E-cigs would likely support a stronger cigarette performance for the company trumping any lost value in its Juul stake," Growe concluded.