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 chief executive officer (CEO) Jack Bowles said. ‘We are on track for a strong year.’

The company said that it expects full-year (FY) 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.

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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.

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.


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