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JPMorgan Backs British American Tobacco Over Imperial Brands in Coverage Restart

JPMorgan reinstated coverage of British American Tobacco (LSE:BATS) with an Overweight rating, while restarting Imperial Brands (LSE:IMB) at Neutral in notes on Tuesday, favouring BAT’s progress in smoke-free products.

BATS.LSE

The bank set a 5,300 pence price target on British American Tobacco, implying about 17% upside from Tuesday’s close of 4,546 pence. BAT shares rose 1.4% on the day and are up 8.9% so far this year.

JPMorgan said BAT’s strategy of developing next-generation products across several categories, including vapes, heated tobacco and nicotine pouches, has been “vindicated with a step change” in its share of the U.S. nicotine pouch market.

The bank added that BAT is also leading the development of the pouch category in Europe.

IMB.LSE

For Imperial Brands, JPMorgan set a 3,200 pence price target, about 11% above Tuesday’s close of 2,893 pence. Imperial shares slipped 0.2% on the day and are down 7.3% year to date.

The bank flagged risks from excise tax changes in Germany, one of Imperial’s key markets.

It also said the company lacks scale in next-generation products, which are increasingly important as smoking rates decline and tobacco companies look for new sources of growth.

Sam Boughedda
Sam Boughedda
Team Member

Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples. 

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