British American Tobacco PLC (LSE:BATS) fell 4% to 4,146p on Tuesday, leaving it at the bottom of the FTSE 100 after its latest trading update offered what one analyst described as “nearly there, but not quite”.
The company said trading for 2025 was “in line”, though expectations were already modest.
It also set out plans to return to what management calls “the algorithm” in 2026, revenue up 3–5%, operating profit up 4–6% and adjusted earnings per share up 5–8%, but warned that performance was “expected at the lower end of the range”.
As the Panmure Liberum analyst put it, this was “yet another year of quite modest expectation setting”.
BAT announced a £1.3 billion share buyback, which the analysis said would retire around 1% of the equity.
That compares with rival Imperial Brands’ programme, which will cancel roughly 6%.
The critique highlighted that, unusually, cigarettes were “top billing” among management’s confidence drivers, helped by stronger US performance that runs counter to much of the recent sector commentary.
Ahead of the update, consensus earnings expectations for 2026 stood at about 362p, with the analyst’s own forecast “~3p lower”. Panmure's view was that “there is not much scope for upside surprises” and even “a risk of slippage”.
On roughly 12 times estimated 2026 earnings and a 5.8% yield, BAT “is certainly not expensive”, Panmure's note said, but Imperial remains cheaper at about 9.3 times with what it called “a considerably more meaningful buyback”.