British American Tobacco PLC (LSE:BATS) jumped over 4% on Monday after fetching a ‘buy’ rating from UBS on likely nicotine pouch-fueled growth ahead.
Flagging BAT as its ‘top pick’ in a note, UBS also hiked the firm’s share price target from 3,000p to 3,900p.
Velo branded nicotine pouch products were expected to accelerate new category sales growth to 16% in 2026, enabling BAT to deliver on its outlook, the bank said.
BAT’s sell-off of a remaining 25.5% stake in tobacco brand ITC also offered flexibility for larger buybacks and debt reduction ahead, UBS noted, leaving scope for re-rating.
Regulatory headwinds looked to be subsiding in the meantime, analysts added, citing the Trump Administration’s move to prevent a planned ban on menthol cigarettes in the US.
Shares climbed 4.3% to 3,137p on Monday.