London-listed tobacco stocks rose Friday on overnight news that the US Food and Drug Administration carried out a surprise inspection on vaping giant Juul.
Officials raided the start-up’s San Francisco headquarters on Wednesday night as part of their “ongoing efforts to prevent youth use of tobacco products”.
READ: Juul gets surprise raid
Juul has a market share of around 75% in the US, but its popularity among teenagers has put it firmly on a collision path with US regulators who are looking to crack down on the industry.
Only last month, the head of the FDA, Scott Gottlieb, called teen use of cigarettes an “epidemic” and cautioned that the agency could be forced to ban flavoured e-cigarettes altogether.
Imperial Brands PLC (LON:IMB) and British American Tobacco PLC’s (LON:BATS) vaping products – blu and Vuse – are also set to be investigated by the FDA.
Despite this, analysts reckon the two companies should benefit from any crackdown, given their relatively small presence in the sector and the fact that they suspect Juul is the primary target.
The rising popularity of e-cigarettes and vaping pens has hit tobacco sales in recent years, so if the US opts to ban flavoured versions, City number crunchers have suggested that the likes of BATS and Imperial could see a rise in sales as people switch back.
BATS shares were up 0.9% to 3,480p on Friday morning, while Imperial’s stock edged 0.7% to 2,662.3p.