Imperial Brands share price: Group trims holding in Logista

Jefferies remains bullish on tobacco manufacturer but lowers valuation

Imperial Brands share price: Group trims holding in Logista

Imperial Brands (LON:IMB) has trimmed its stake in Madrid-listed Logista, the blue-chip company has said. In a separate development, Jefferies reaffirmed the FTSE 100 company as a ‘buy’ yesterday, while lowering its price target on the shares, arguing that the tobacco giant is even cheaper than headline numbers suggest.

Imperial Brands’ share price climbed into positive territory in the previous session, closing 0.31 percent higher at 3,210.00p, outperforming the broader UK market, with the benchmark FTSE 100 index posting a dip on the back of ongoing geopolitical concerns. The group’s shares have lost more than 22 percent of their value over the past year, and are down by just under 10 percent in the year-to-date.

Imperial Brands announced in a statement this morning that it had sold 13.3 million shares of Compania de Distribucion Integral Logista, raising gross proceeds of about £230.8 million. The FTSE 100 group announced the move yesterday, noting that up to £160 million of the proceeds would be used for a share buy-back.

“Logista continues to perform strongly and we have taken this opportunity to realise further value from the business and use the proceeds to buy-back Imperial Brands shares and reduce net debt,” Imperial Brands’ chief financial officer Oliver Tant noted in a statement yesterday.

Separately, Jefferies reaffirmed the FTSE 100 tobacco group as a ‘buy’ yesterday, while lowering its valuation on the shares from 4,200p to 4,100p.

“While the headline multiple looks cheap, a sum-of-the-parts shows the underlying valuation is cheaper still,” the broker’s analyst Owen Bennett said, as quoted by Citywire, adding that the shares currently traded a 34-percent discount to the wider tobacco sector, which is “worse than the troughs of April 2013 when the company announced its model was no longer sustainable and it needed a change”.

“Ardent bears will agree this is overly negative. Any positive news should drive re-rating at these levels,” the analyst concluded. 

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