FTSE 100 Risers & Sliders: BAT higher after coughing up damages, IAG dips lower

British American Tobacco saw its share price climb higher this week after FDA chief resigns despite the company coughing up millions in Canadian ruling, while IAG struggles over absence of post-Brexit clarity.

FTSE 100 Source: Bloomberg

British American Tobacco (BAT) saw its share price gain more than 10% this week, climbing to £31.29 on Thursday. The cigarette maker’s share price rallied following news that the head of the US Food and Drug Administration (FDA) unexpectedly resigned.

Scott Gottlieb, the FDA’s chief commissioner, prior to stepping down, had created issues for big tobacco, with him leading efforts to ban menthol cigarettes and limit e-cigarette use among teenagers.

In a note to investors, Deutsche Bank analysts said that his departure was ‘rather abrupt and surprising’ but is ‘likely positive’ for big tobacco.

However, even though the resignation will relieve some regulatory pressure on BAT and its rivals in the short-term, the tobacco products division of the FDA will likely continue to impose greater restrictions on the sector once a new chief is appointed.

Despite a strong showing this week, BAT was hit by a £436 million fine after the Canadian Federal Court of Appeal upheld a class action lawsuit judgement that compensated smokers for health problems related to cigarettes.

BAT said it was disappointed with the decision and intended to appeal and take it to the Canadian Supreme Court for review.

‘We are still of the view that this decision is wrong — ignoring the reality that both adult consumers and government have known about the risk associated with smoking for decades. As a result, we believe it should be overturned,’ the company said.

FTSE 100 Risers

Unilever has also had a strong week, with its share price steadily gaining more than 4% over the last five days from £39.82 on Monday to breaking through £41 levels on Thursday and edging higher still on Friday.

The British-Dutch consumer goods company published its full-year 2018 results at the end of January, recording a solid year’s performance underpinned by good volume growth and high-quality margin progression.

The company is forecasting much of the same this year, despite market conditions remaining challenging, with its management expecting underlying sales growth in the lower half of its 3% to 5% range and improvement in its operating margin, resulting in another year of strong free cash flow.

Another notable riser this week is Experian, which has seen its share price steadily climb more than 3% over the last five days, breaking through the £20 mark on Tuesday and continuing its ascent.

The credit reporting company was forced to call off its £275 million acquitions of ClearScore in-late February due to objections from the UK Competitions and Market Authority.

However, despite this setback, the company continues to grow from strength to strength, with the world’s ever-increasing demand for data and related services showing no signs of slowing, helping Experian’s earnings per share to compound at an annual rate of 29% over the last six years.

FTSE 100 Sliders

International Consolidated Airlines Group (IAG) have had a tough week, with its stock losing more than 5% of its value, sliding below £6 levels and sitting at £5.44 as of 11:30am GMT.

Last week, the British Airways owner posted a strong set of full-year results, despite rising fuel costs and air traffic control strikes threatening to hurt the company’s profits. But the group's share price has since suffered, primarily because its management have failed to provide clarity on how it plans to handle airline disruption post-Brexit.

To make matters worse, at the start of the year, officials in Brussels warned IAG that it must be able to show it is more than 50% owned and controlled by EU investors if it is to retain flying right in the bloc.

Brussels tough stance has led to the group blocking non-EU investors from buying stock, applying downward pressure on its share price.

Elsewhere in the market, British multinational asset manager Schroders has seen its stock tumble more than 8% this week, with its CEO Peter Harrison vowing its will recover, despite the company recording a 15% dip in profit in its full-year results.

‘We remain confident that our global presence and diversified business model mean we are well positioned to generate growth for both our clients and shareholders over the long term,’ Harrison added.


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