Material upside to BAT despite rally after first-half results.
British American Tobacco missed our estimates of first-half revenue and operating profit by just over 2%, but the fact that the company beat consensus with underlying revenue growth of less than 2%, and the market has reacted so favourably, shows how pessimistic expectations of tobacco industry performance have become. We are reiterating our GBP 48 fair value estimate and our wide moat rating, and we believe there is upside to BAT and to the other large cap tobacco manufacturers in our coverage....British American Tobacco is engaged in tobacco and nicotine products. This includes Co.'s Next Generation Products, comprising its vapour and tobacco heating products, and its oral tobacco and nicotine products such as moist snuff and snus. Co.'s U.S business (Reynolds American) brand portfolio which includes Newport, Camel and Pall Mall. These, and other brands including Doral, Misty and Capri, are manufactured in a variety of styles and marketed throughout the U.S. Co. has other international and local cigarette brands including Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, Benson & Hedges, John Player Gold Leaf, State Express 555 and Shuang Xi.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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