British American Tobacco might see its profits from e-cigarettes double due to the ban on rival Juul, according to brokers at Barclays.
The UK business owns rival Vuse, which is in a prime position to pick up business from Juul customers said the broker and transform the performance of BATS’ next generation (NGP) arm.
“According to our per-pack analysis and BAT's disclosures, we estimate that BAT lost c$1.20/pod EBIT in US e-cigs in FY21, or almost -$350mn, which will likely swing to $0.40+ in EBIT/pack in FY22, or US$160mln.
“With increasing prices, reduced trade margins and scale benefits in US e-cigs, we estimate BATS could grow US e-cigs EBIT to c$600mn+ in FY25.
“And with last week's developments in the US e-cig industry, BATS US e-cigs EBIT could be even higher.”
Barclays had an 'overweight' view on BAT with a 4,400p price target. Shares today rose 1.7% to 33,630p.