BTI - Swedish Match: Q3 Nicotine Pouch Strength Hidden By Post-COVID Weakness In Older Products

• Swedish Match stock has lost 7.9% in 4 days since Q3 2021 results, after disappointing group EBIT and U.S. Smokefree sales figures.
• ZYN nicotine pouches grew U.S. volume by 8.7% since Q2 and kept a 64% category share; but investors fear this was done with discounts.
• Instead, we believe weak U.S. Smokefree sales and EBIT were due to older products like moist snuff losing their volume boost from COVID.
• Weak U.S. Cigars EBIT was likewise due to a tough pandemic-year comparable and COVID-related external supply chain issues.
• Swedish Match's growth engine is intact. With shares at SEK 74.58, we expect a total return of 69% (18.7% annualized) by 2024. Buy.

For further details see: