Imperial Brands share price: Name change signifies positive transformation at tobacco giant

on Feb 15, 2016
Updated: Oct 21, 2019

Deutsche Bank sees Imperial Brands Plc’s (LON:IMB) decision to drop “tobacco” from its name as indicative of the wider positive change the company is currently trying to implement. The German lender described the former Imperial Tobacco’s decision to change its name as “the most public manifestation” of CEO Alison Cooper’s commitment to transform the company and move its focus from costs to consumers and brands.

“The extent to which CEO [Alison] Cooper has and will likely continue to transform Imperial internally and away from external eyes should not be underestimated. The journey from a cost-focused “M&A house that happens to sell cigarettes” to a business focused on top-line sustainability with positive valuation implications has, at times, been very difficult,”Gerry Gallagher, an analyst at Deutsche said, as quoted by Citywire. He added that “the potential upside from a 14.6% price-to-earnings ratio should not be underestimated in our view”.

The analyst reaffirmed his “buy” rating on the stock, with a target price of £41.10 a share.
Last Thursday Imperial released first quarter results, which showed that the company’s revenue had increase 16.6 percent over the period despite a three –percent fall in tobacco volume. The increase was partly due to price rises in several of Imperial’s markets.The results indicated that Imperial’s US brands, which it acquired last year for $7.1 billion, had made a significant contribution to the company’s performance in the quarter.
In today’s trading, Imperial Brands shares were up 2.3 percent at 3,634.00p, as of 15:09 GMT. The stock has risen 1.3 percent since the start of the year and the company’s market capitalisation currently stands at £34.8 billion.
The 18 analysts offering 12-month price targets for Imperial Brands have a median target of 3,905p, with a high estimate of 4,300p and a low estimate of 2,700p. As of February 13, 2016, the consensus forecast amongst 22 polled investment analysts covering Imperial Brands had it that the company will outperform the market. The same consensus estimate has been maintained since August 24, 2015, when the sentiment of investment analysts improved from “hold”.
As of 15:57 GMT, Monday, 15 February, Imperial Tobacco Group PLC share price is 3,499.50p.