JAPAF - Japan Tobacco: Weak 2024 Outlook Disappoints But Ploom X Could Be A Winner

2024-02-16 15:11:00 ET

Summary

• While Japan Tobacco has been an outlier among tobacco stocks with price gains in the past year, the same might not continue in 2024.
• Its recent results are good, but the profit outlook for 2024 is weak. As a result, it looks richly valued compared to peers and the dividend yield isn't comparable either.
• Still, its focus on its newest heated tobacco stick, Ploom X, could be a winning growth strategy and the medium-term profit outlook is still alright prompting a Hold rating.

Japan Tobacco ( JAPAF ) ( JAPAY ) is an outlier among tobacco stocks, with a 25% price rise over last year compared to falling prices for peers (see chart below). This was likely due to its good financials and positive outlook when I last wrote about the stock in November....

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