Imperial Brands share price: Analysts weigh in on vaping hit

Imperial Brands share price: Analysts weigh in on vaping hit
Written by:
Tsveta van Son
27th September 2019
Updated: 11th March 2020

A string of vaping related deaths in the US has thrown the future of the sector into question, weighing on Imperial Brands (LON:IMB), Hargreaves Lansdown has said. The comments came after the blue-chip tobacco group cautioned on earnings yesterday, amid what it referred to as a challenging market for new generation products in the US. The group’s next generation products sales meanwhile are expected to grow less than previously thought this year.

Imperial Brands’ share price, which tumbled yesterday, has extended its slide this morning, having given up 2.28 percent to 1,757.22p as of 08:57 BST. The group’s shares are underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.83 percent higher at 7,412.03 points.  Following the previous session’s bloodbath, the stock has lost more than 35 percent of its value over the past year.

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HL weighs in on Imperial Brands

Hargreaves Lansdown analyst Nicholas Hyett commented in a note yesterday that the challenge for Imperial Brands’ CEO Alison Cooper was the fact that “global tobacco volumes are shrinking, albeit slowly”.

“The decision to increase marketing and development spending to protect and expand the portfolio is welcome,” the analyst pointed out, adding, however, that “investment will slow rather than reverse declines, making Imperial’s vaping and heated tobacco products crucial to longer term success”.

“A recent marketing splurge had started heating things up, but a string of vaping related deaths in the US has thrown the future of the sector into question,” Hyett continued, concluding that “time will tell how badly it undermines the sector’s key growth driver”.

Other analysts on tobacco group

Royal Bank of Canada, which is bearish on the tobacco maker with a ‘sell’ rating, set a target on the Imperial Brands share price of 2,100p yesterday. According to MarketBeat, the blue-chip group currently has a consensus ‘hold’ rating and an average valuation of 2,829.58p.

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