Citigroup reiterated its 'buy' rating on British American Tobacco PLC (LSE:BATS) following the group’s first presentation at the Consumer Analyst Group of New York conference.
Citi confirmed the stock remained its top pick for 2026 within the Staples sector.
The bank described the presentation as confident and upbeat, with management emphasising the group’s multi-category approach to transforming the business towards new nicotine categories.
The chief executive set out the core attractions of British American Tobacco’s offerings across Modern Oral, Vapour and heated tobacco products.
Modern Oral refers primarily to nicotine pouches, Vapour to electronic cigarettes, and heated tobacco products that deliver nicotine by heating rather than burning tobacco.
Management also underlined the continued importance of the combustibles portfolio, particularly in the United States, in funding and supporting the transformation journey.
Citi noted that the combustibles business remained central to cash generation and underpinned investment in reduced-risk products.
The bank highlighted management’s ongoing confidence in the momentum of Velo, the group’s leading Modern Oral brand.
This confidence was maintained despite the prospect of increased competition in nicotine pouches.
Citi also pointed to what it described as an improving regulatory backdrop in the United States.
In addition, recent one-off headwinds affecting wider group organic sales growth were seen as easing.
Organic sales growth, or OSG, measures revenue growth excluding the effects of currency movements and acquisitions, providing a clearer view of underlying performance.
Taken together, Citi argued that British American Tobacco remained one of the most compelling change and rerating stories in Staples.
A rerating refers to a sustained increase in a company’s valuation multiple, such as the price to earnings ratio, as investor perceptions of growth, risk or quality improve.
In Citi’s view, the combination of strengthening momentum in new categories, resilient cash flows from combustibles and a more supportive regulatory environment created meaningful upside optionality in the shares.
In afternoon trading, the shares were up 0.8% at 4,380p.