How are energy investors positioned?
On Friday, Goldman Sachs revised the price target for shares of British American Tobacco (BATS:LN) (NYSE: NYSE:BTI), increasing it to GBP28.00 from GBP27.50. The investment firm has chosen to maintain a Neutral rating on the stock.
The adjustment comes after a period of strategic moves by the tobacco company. Over the past year and a half, British American Tobacco has enhanced the profitability of its new product categories and addressed issues in its US combustibles segment. Moreover, the company has made strides in reducing debt, which has allowed for the resumption of share buybacks.
Looking ahead, Goldman Sachs anticipates that the fiscal year 2024 will mark a low point for the company's earnings per share (EPS) growth. However, the firm predicts that British American Tobacco will see a modest improvement in operating performance. This, combined with declining finance costs and continued share buybacks, is expected to contribute to an acceleration in EPS growth from fiscal year 2025 to 2027.
Despite these positive developments, Goldman Sachs maintains a cautious stance due to persistent challenges in the US combustibles market. Although British American Tobacco has narrowed the gap with its competitors in this segment, there is still uncertainty regarding the easing of volume declines.
As a result, Goldman Sachs has reduced its volume forecasts for US combustibles over the fiscal years 2024 to 2026 and does not anticipate that price increases will entirely compensate for the volume losses.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.