BAT's set-up currently is appealing and there is a lot of upside potential at the cigarette group, reckon analysts at US bank Jefferies.
In particular, BAT’s non-US businesses are often overlooked but are growing handily and should be supported by a recovery in US industry volumes in both cigs and vape products.
Ex-US organic sales and underlying profit grew by 9% and 8.5% respectively in 2023, with growth of 6.5% and 6.3% forecast by the bank for this year.
In the US, Premarket Tobacco Product Applications (PMTA) approval of BAT's tobacco vape should also be a significant boost to the multiple, and alongside a possible ITC stake sale and buyback implications, “we see sizeable upside potential”.
Buy with a price target of 3.000p is Jefferies’ recommendation.