British American Tobacco: Stock Down After Stable FY22 Update; 9x P/E
(Preview) Company Update (BATS LN) (Buy)
Summary
Shares are down 2.8% in London this morning after the company updated on FY22. P/E is now 9x and Dividend Yield is 6.6%.
Full-year guidance of a mid-single-digit EPS growth (at constant currency) was reaffirmed. EPS should grow 12% in pounds.
In cigarettes, downgrading in the U.S. has accelerated in H2, but volumes in Emerging Markets were better than expected.
The company is leading in Vapor but remains behind in Heated Tobacco and Oral Tobacco; there are also pending regulatory and tax risks.
With shares at 3,316p, our return forecasts indicate a total return of 56% (17.9% annualized) by 2025 year-end. Buy.
Introduction
British American Tobacco p.l.c. ("BAT") released its H2 2022 pre-close update this morning (December 8). (U.K. companies release "pre-close updates" before the close of a reporting period.) BAT shares are down 2.8% in London as of 1 pm local time.
We originally upgraded our rating on BAT to Buy in March 2020. Since then, shares have gained 54% (including dividends) …