British bank Barclays on Friday initiated coverage on British American Tobacco plc (LON:BATS) with an ‘overweight’ recommendation and a price target of 5,000p.
“The global tobacco industry is ushering in a new era of competitive disruption heralded by heat-not-burn in the East and e-cigarettes in the west,” Barclays said in a note to clients, adding that it believes BAT is approaching this era with a consistent strategy and a well balanced geographical and product architecture.
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The world’s second-largest listed tobacco group by market share last month saw its sales jump by 57% to £11.64bln for the half-year to 30 June 2018, with profit from operations ahead 72.4% to £4.438bn, and its adjusted earnings per share (EPS) of 137.2p ahead of expectations.
Barclays, which said BAT shares look cheap based on a 2019 price–earnings ratio of 13x, said it has faith in the company’s prospects, hence its 5,000p price target that offers around 20% upside potential.
Shares in BAT were flat at 4,195p in late morning trade.