BAT share price steams ahead as group signals confidence in next-gen products


Revenues from unit expected to double next year

Shares in British American Tobacco (LON:BATS) have jumped more than one percent in London as the group signalled confidence in its next generation products. The division, whose offerings include e-cigarettes, is expected to generate £5 billion in revenue and ‘substantial profit’ by 2022.

As of 10:26 BST, BAT’s share price had added 1.69 percent to 4,906.50p, outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into the red and currently standing 0.45 percent lower at 7,492.92 points. The group’s shares have added more than four percent to their value over the past year, and are up by some six percent in the year-to-date.

Next-gen products update

BAT announced in a Capital Markets Day update today that its objectives for its Next Generation Products (NGP) division included generating revenue over £500 million this year, and doubling it next year to over £1 billion, rising to more than £5 billion in 2022. The tobacco giant further expects the business to be breaking-even by the end of next year and to deliver ‘substantial profit’ by 2022.

“Our NGP business has real momentum and our confidence is reflected in the financial objectives we have set out,” the FTSE 100 group’s chief executive Nicandro Durante commented in the statement.

The update comes after BAT unveiled an operational shake-up earlier this year in an effort to boost its presence in the e-cigarettes market, integrating the NGP business into its core operations.

Analysts on BAT

In analyst news, JPMorgan Chase & Co reiterated its ‘overweight’ rating on British American Tobacco last week, valuing the shares at 5,610p, while earlier this month, Credit Suisse, which sees the company as an ‘outperform,’ trimmed its price target on the stock from 6,100p to 5,800p. According to MarketBeat, BAT currently has a consensus ‘buy’ rating and an average valuation of 5,700.71p. 

As of 10:55 BST, Wednesday, 25 October, British American Tobacco plc share price is 4,947.50p.