British American Tobacco share price: what to expect from full year results

In this article we find out what we can expect from the upcoming British American Tobacco results, how they could affect the company share price as well as how to trade  the earnings.

When is British American Tobacco’s earnings date?

The British American Tobacco (BAT) earnings release date is scheduled for the 17 February 2021. The results will cover the groups fourth quarter (Q4) and full year (FY) earnings.

British American results preview: what does the street expect?

British American Tobaccos Q4 and FY20 results and earnings are expected to benefit from continued revenue growth in the ‘New Category' products. The ‘New Category Products’ include Vuse (vapour products), Velo (modern oral products) and GLO (tobacco heating products or THP). Vuse is currently the fastest growing vapour brand in the world, GLO is expecting to see volume growth of more than 20% while Velo is continuing to expand its portfolio (partly through acquisition) in the US.

The combustibles (cigarettes) division remains the groups core business, while diversification efforts are ongoing. Operations in this department are expected to have resulted in volume growth ahead of the industry, driven by strategic pricing initiatives. This is however an industry under pressure with Covid-19 restrictions and headwinds having weighed on the business over the reporting period.

While on a constant currency adjusted basis, revenue growth of between 1% and 3% is forecast by the group, revenue without the adjustment could be flat to slightly negative.

A Refinitiv consensus of analyst estimates suggests revenue for FY20 to have declined by 0.82% to £25,664 million, although earnings per share (EPS) are expected to have grown by 1.87%.

How to trade British American Tobacco FY20 results

The two graphics below provide traders with both a retail short-term view on the stock, as well as an institutional longer-term view on the British American Tobacco share price, as to how market participants are positioned ahead of the FY20 earnings release.

A Refinitiv Workspace poll (above table) of 22 analysts maintain a long-term average rating of ‘buy’ for British American Tobacco (as of 15 February 2021).

From a retail trader perspective (as of 15 February 2021), 80% of IG clients with open positions on British American Tobacco expect the share price to rise over the near term, while 20% of IG clients with open positions expect the price to fall.

British American Tobacco share price: technical analysis

The British American Tobacco share price continues to trade in a rangebound environment over the medium term considered between levels 2635 (support) and 2740 (resistance).

In the short term we see the share price breaking resistance of the consolidation highlighted grey on our chart. The breakout suggest that the move off the broader range support may be gaining momentum with 2840 the initial upside resistance target from the move. A break above this level (confirmed with a close), would consider range resistance at 2970 a longer-term target.

Traders who are long might use a close below the midpoint of the near term consolidation at 2680 as a stop loss consideration.

In summary

  • British American Tobacco FY20 results are scheduled for release on the 17 February 2021
  • Group revenue for the group is expected to be flat in FY20, although underlying EPS are expected to have increased marginally
  • The average long-term broker rating for British American Tobacco is ‘buy’
  • The majority of IG clients with open positions on British American Tobacco expect the price to rise in the near term
  • A technical analysis view on the British American Tobacco share price shows a short-term upside breakout in a medium-term rangebound price environment

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