BAT Industries has received a strong endorsement from analysts at JP Morgan, which sees the tobacco giant having scope to build on its 27% rise this year.
“With its strong pricing power, undemanding valuation, sizeable capital returns, and a cost-based relatively insulated from commodity inflation, we expect tobacco to continue to outperform staples peers,” said the broker.
BAT especially benefits further from strong NGP (next generation) momentum that supports medium-term top-line growth.
Potential for an incremental P&L and valuation boost should rival Vuse Alto receive approval for its NGPs while it was reported yesterday that JUUL may be banned from the US.
Overweight with a price target of 4,000p is JPM’s view.