Imperial Brands share price dips as group flags minimal impact from US tax cuts

By: Alice Young
Alice Young
Alice joined the Invezz team after motherhood convinced her to make a career change from actuary-ing. She brings a… read more.
on Jan 18, 2018
Updated: Mar 11, 2020

Shares in Imperial Brands (LON:IMB) have fallen into the red in today’s session as the tobacco manufacturer flagged only minimal impact from the tax changes on the other side of the Atlantic. The update comes ahead of the company’s annual general meeting on February 7.

As of 13:35 GMT, Imperial Brands’ share price had given up 2.74 percent to 2,988.17p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.45 percent lower at 7,690.73 points. The group’s shares have lost just under 16 percent of their value over the past year, as compared with an over six-percent rise in the Footsie.

Minimal US tax reform impact

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Imperial Brands said in a statement this afternoon that the recently announced changes to the US federal corporate tax rate were not expected to materially impact the group’s adjusted effective tax rate going forward.  For the financial year ending September 2018 the tobacco maker currently expects that the reduced taxation of US earnings will result in a benefit of less than one percent to the group’s adjusted effective tax rate.

Imperial Brands noted that it will further revalue its US deferred tax assets and liabilities, with the move expected to result in a one-off credit of around £20 million, which, however, will not impact the company’s adjusted earnings.

Analysts on Imperial Brands

JPMorgan Chase & Co, which has a ‘neutral’ rating on Imperial Brands, set a price target of 3,275p on the shares today, while earlier this week, analysts at Citigroup reiterated their ‘neutral’ stance on the company without specifying a valuation on the shares. According to MarketBeat, the blue-chip tobacco maker currently has a consensus ‘buy’ rating and an average price target of 3,908.67p.

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