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On Tuesday, BofA Securities analysts reiterated a Buy rating for British American Tobacco (NYSE:BTI) stock, along with a price target of £39.00. This decision comes after the company released its first-half 2025 pre-close trading statement, which showed a slight increase in full-year 2025 revenue guidance to approximately 1-2% from the previous 1%. The company also maintained its adjusted EBIT growth outlook of around 1.5-2.5%.
The trading statement highlighted several key developments. There was a slight improvement in U.S. combustibles, with management expecting sales and EBIT growth to resume in the U.S. from the first half of 2025. Additionally, VELO, the company’s modern oral product, continues to show strong growth, and the launch of Glo Hilo in Serbia has been encouraging.
Despite these positive developments, the company’s vapour performance has been disappointing, which has impacted the overall revenue growth of its New Categories segment. The New Categories revenue growth was lower than expected, with a low-single-digit increase in the first half compared to the consensus of around 9%.
Management remains confident that New Categories sales will achieve mid-single-digit revenue growth for the full year, despite the consensus estimate being around 12%. The company has also confirmed its medium-term growth algorithm, which projects sales growth of approximately 3-5% and EBIT growth of around 4-6%, starting in 2026.
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