SWMAY - Swedish Match: No U.S. Cigars IPO For Now But Still Doubling Potential
- Swedish Match stock fell 7% in Stockholm on Tuesday morning, after preparations for the U.S. Cigars IPO were suspended indefinitely.
- The suspension was due to the FDA denying the Substantive Equivalence designation for about 3% of the company's cigars (by volume).
- The products are likely flavored cigars. They remain on sale, it would take years for the FDA to stop them and it may not succeed.
- Flavored cigars are likely less than 10% of group EBIT. Group EBIT would have still grown 13.6% in 2021 even had U.S. Cigars EBIT stayed flat.
- With shares at SEK 68.00, even on reduced forecasts, we expect a total return of 102% (21.2% annualized) by 2025 year-end. Buy.
For further details see:
Swedish Match: No U.S. Cigars IPO For Now, But Still Doubling Potential