Jefferies sees more than 20% upside in Imperial Brands PLC (LSE:IMB), arguing the tobacco group is “well-positioned” for a stronger second half as resilient cigarette trading offsets pressure in next-generation products.
The broker has repeated a Buy rating and kept its price target unchanged at 3,500p, implying 21% upside from the prior close of 2,889p.
Imperial’s fiscal 2026 organic EBIT guidance of 3% to 5% growth looks “likely protected”, according to Jefferies, helped by robust market-share trends in combustibles and what the broker described as a conservative approach to investment in next-generation products.
Jefferies expects group cigarette volumes to fall 1.7% in FY26, but forecasts Tobacco & NGP organic sales growth of 2.1% and organic EBIT growth of 3.3%.
A potential weaker spot is next-generation products, where Jefferies warns Imperial may be “missing the start” of a potential recovery in legal US e-vapour after deciding to end sales of its legacy myblu device in the United States.
The broker also flagged a limited innovation pipeline in oral nicotine pouches, where larger rivals are expected to bring new products to market.
Even so, Jefferies said that while NGP growth is slowing, Imperial trades at 7.7 times calendar 2027 earnings, which it views as attractive for a cash-generative combustibles business focused on shareholder returns.