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Investing.com - Jefferies initiated coverage on Japan Tobacco (TYO:2914) with a Hold rating and a price target of JPY4,640.00 on Wednesday.
The research firm cited Japan Tobacco (OTC:JAPAF)’s global volume share gains in traditional cigarettes, which it attributes to the company’s strong presence in emerging markets, as a positive factor for the core combustible business.
Jefferies also noted that Japan Tobacco’s Global Flagship Brands have gained market share in key developed markets, while its recently acquired U.S. discount brands are outperforming the wider market.
Despite these strengths, Jefferies remains cautious due to the slow growth of Japan Tobacco’s Next-Generation Products, which account for only 4% of revenues in 2024.
The firm also pointed to Japan Tobacco’s demanding valuation, with the stock trading at a calendar 2026 price-to-earnings ratio of 14x, representing a 65% premium to Imperial Brands (OTC:IMBBY) and a 46% premium to British American Tobacco (NYSE:BTI).
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