Imperial Brands share price: Deutsche Bank sees tobacco group as ‘too cheap’

on Jun 23, 2017

Shares in Imperial Brands (LON:IMB) are getting too cheap again, following the company’s results in May, analysts at Deutsche Bank have said. The comments came as the bank reiterated its bullish stance on the tobacco group.

Imperial Brands’ share price has been little changed in today’s session, and as of 10:17 BST was standing at 3,583.50p, flat in percentage terms. The stock is slightly outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.24 percent lower at 7,421.36 points. The group’s shares have lost more than two percent of their value over the past year, but are up by about one percent in the year-to-date.

Deutsche Bank reaffirmed Imperial Brands as a ‘buy’ yesterday, with a target price of 4,100p on the stock, after the group’s shares fell seven percent since the results in May.
“The shares once again discount enough to hit the valuation radar in our view,” the bank’s analyst Gerry Gallagher commented, as quoted by Citywire, adding that the stock was generally characterised as ‘cheap’ but that the question the market grapples with was growth.

“Optically cheap in year one or year two needs to be considered against the longer-term outlook and relative growth rates overlaid with variables such as the tobacco heating products debate and potential mergers and acquisitions,” he pointed out.
The 16 analysts offering 12-month price targets for Imperial Brands for the Financial Times have a median target of 4,125.00p, with a high estimate of 4,600.00p and a low estimate of 3,500.00p. As of June 16, the consensus forecast amongst 20 polled investment analysts covering the blue-chip group has it that the company will outperform the market.