This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Trade Parameters
Observations – For
Observations – Against
Shares starting to reverse after a 30% sell-off. GBP weakness helps the shares in terms of foreign sales being worth more when translated back to Sterling. Attractive 5%+ dividend yield. Tobacco is deemed a defensive sector on account of smoking being a non-cyclical product, less sensitive to economic ups and downs. Innovation in e-cigarettes contributing more and more.
The shares could suffer if markets rally hard, with a preference for more risk-oriented assets (e.g. Banks, Miners). A big strengthening in GBP could hit the share price as would problems getting new products approved/poor uptake by smokers or a profits warnings due to weak sales or exceptional costs.
Broker consensus is predominantly bullish, with 75% of analysts saying Buy, 25% neutrals and none advocating Sell. With an average 12-month price target of 4780p (well beyond our short-term target) a significant 94% of analysts suggest upside from current levels, which may encourage neutrals to upgrade.
Next Event: Ex-div (48.8p/1.2%) 28 Jun; H1 Results, 26 Jul
Latest Broker 12-Month Consensus: 75% Buy, 25% Hold, 0% Sell (full breakdown on request)
Source: DowJones Newswires, Reuters News, Bloomberg or Company Press releases
| Share | 1wk | 1m | 3m | 6m | 1yr | 2yr | 3yr | 4yr | 5yr |
| Perf % | 3.0 | 0.7 | -4.1 | -22.2 | -31.2 | -9.6 | 7.9 | 6.4 | 14.4 |
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Prepared by Michael van Dulken, Head of Research