2024-02-23 13:30:00 ET
Summary
- BAT's revenue declined by 1.3%, but its shift towards smokeless products helped mitigate significant challenges on its legacy products.
- The company's more robust performance in smokeless products and high dividend yield should attract income investors.
- Uncertainties in the regulatory environment threaten BAT's transition to reduced-risk products.
- Given the shifting regulatory environment, I explain why BAT is expected to remain materially undervalued.
- Despite that, I argue why significant pessimism is priced into BTI, as its price action is increasingly constructive.
I last updated British American Tobacco p.l.c. ( BTI ) investors in December 2023, arguing why I believed it reached "washed-out levels." As a result, I assessed that BTI could have formed its long-term bottom after the company announced a substantial asset impairment related to its US combustible brands. Commonly known as BAT, the company reported its preliminary results for the full year FY23 in early February 2024. While the market reacted positively initially, BTI's buying momentum has struggled to gain traction. As a result, I assessed that BTI remains materially undervalued as investors continue to evaluate its ability to transform its business model toward reduced-risk products over time....
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British American Tobacco: Uncertainty On Smokeless Future Offers A Golden Buying Opportunity