BTAFF - British American Tobacco: Fighting An Uphill Battle
2024-06-15 01:09:14 ET
Summary
- After a brief pause in which British American Tobacco performed largely in-line with the S&P500, I believe the stock is due to lag behind again.
- In the H1 FY24 Pre-Close update, management attributed a host of macroeconomic variables to explain weaker than expected performance in the largest segment of US Combustibles.
- I think these explanations distract and fail to focus on the root drivers; a secular decline due to changing consumer habits and loss of market share within the sector.
- It looks like the FDA is trying a bit harder to counter illicit vapes supply, which proliferate more than 60% of the market. But I believe this is an uphill battle that is hard to win.
- There is no meaningful catalyst to stop the bleed of alpha erosion in BTI and I'd rather not fight the bearish trend. For income-focused investors, it would be wise to monitor for capital and total return erosion.
Performance Assessment
I've probably been the most bearish Seeking Alpha analyst on British American Tobacco ( BTI ) ( OTCPK:BTAFF ) over the past year and a half. But in my last update , I changed my rating to a 'Neutral/Hold' to reflect my view of performance in-line with the S&P500 ( SPY ) ( SPX ) market index henceforth. Looking at the results, I think I was accurate in this assessment again:
Performance since Author's Last Article on BTI (Author's Last Article on BTI, Seeking Alpha)