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British American Tobacco share price: where next amid US vaping crackdown?

The tobacco company pleased investors last week, announcing that it expects to deliver a strong performance in 2019 despite US regulators cracking down on vaping products.

British American Tobacco (BAT) told investors last week that, despite US regulators cracking down on vaping products, it still expects to end 2019 on a high.

‘We expect to deliver a strong performance in 2019, building on the good progress we made in the first half,’ BAT CEO Jack Bowles said. ‘We are on track for a strong year.’

The company said that it expects full-year adjusted revenue to hit the high end of its 3% - 5% guidance range and operating profit at the top of its 5% - 7% range, with combustibles offsetting the slowdown in sales in the US vaping market.

The news helped send BAT’s share price more than 3% higher, with the stock closing at £30.50 on Monday.

Looking to trade BAT and other tobacco stocks? Open a live or demo account with IG.

Jefferies optimistic about BAT’s price trajectory

Analysts at Jefferies reiterated their ‘buy’ rating for the stock in November and issued a target price of £48, which represents a potential upside for the stock of 57%.

Liberum Capital is less upbeat about the stock’s price trajectory, however, reiterating its ‘buy’ rating and issuing a target price of £31.70 a share.

However, analysts at DZ Bank reiterated their ‘sell’ rating and issued a price target of £26.50, representing a potential downside of -13%.

You can go long or short BAT with IG using derivatives like CFDs and spread bets.

BAT ‘well placed to succeed’ in strong regulatory environment

BAT believes that issues around vaping that have led to a clampdown in the US will ultimately help the company moving forward.

‘Increased investment and new product launches are delivering good New Category revenue growth in H2, despite the recent slowdown in the US vapour market,’ Bowles said.

‘We believe that the issues around vaping in the US should lead to a better and stronger regulatory environment in which we are well placed to succeed.’

After a series of deaths and respiratory illnesses were linked to vaping, several US states moved to ban the sale of e-cigarettes and other vaping-related products.

Earlier this year, BAT’s smaller rival Imperial Brands said that its vaping business has seen sales growth suffer due to the crackdown by US regulators.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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