Last close As at 05/08/2026
GBP43.78
▲ −14.00 (−0.32%)
Market capitalisation
GBP94,671m
Research: Consumer
British American Tobacco’s (BAT’s) H126 trading update confirms the company is on track to deliver underlying operational guidance for the year. This is driven by an acceleration in revenue growth by New Categories, along with an increasing contribution, while there is a small decline in value share for Combustibles in its top markets. BAT is the fastest growing business in total nicotine in the US. Management is flagging that profit delivery for the year will be H2 weighted given an expected stabilisation of its performance in APMEA and the delivery of Fit2Win savings.
The highlight of the trading update is the acceleration in growth from New Categories, which is now expected to increase by mid-teens in H126 and FY26 from low double-digit growth previously, driven by Modern Oral (Velo) and Vapour (Vuse). Velo has delivered strong double-digit revenue growth with share gains in a growing market. Overall volume share of Modern Oral has increased by 7.4pp in its top markets, including 10.4pp growth by Velo Plus in the US, and share leadership in Americas and Europe (AME). Vuse’s revenue is expected to grow by mid-single digits in H126 and FY26, with value share gains in the US (+4.2pp) more than offsetting value share declines in AME (-1.5pp).
Heated Products (glo) is the weak spot with an expected low-double-digit revenue reduction in H126 and FY26 due to inventory adjustments in Japan and competitive intensity in the value segment. The competitive intensity has led to volume share declines in top markets. However, management expects better trends in volume share in H2 as glo Hilo, which has led to share gains in the premium segment in H126, scales along with the phased rollouts of Hyper Pro Plus.
For Combustibles, management points to continued momentum in the US, with resilience in AME and APMEA slower than expected. For APMEA, management anticipates the performance will stabilise through the year.
There is no change to management’s overall operational guidance for the year except for an increase in New Categories constant currency revenue growth. There is a small change to non-operational guidance with financial expenses now expected to be marginally lower (£1.75bn) than previously (£1.8bn). Management also now anticipates a slightly greater decline in global cigarette industry volumes (2.5%) than previously (2%). With respect to fx, management guides to a c 1% transactional headwind and a translational headwind of 2–3% on H126 and FY26 adjusted diluted EPS growth.
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Consensus estimates |
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|---|---|---|---|---|---|---|
| Year end | Revenue (£m) | EBIT (£m) | EPS (p) | DPS (p) | P/E (x) | Yield (%) |
| 12/24 | 25,867.0 | 11,370.0 | 341.10 | 240.24 | 13.1 | 5.4 |
| 12/25 | 25,610.0 | 11,279.0 | 340.50 | 245.04 | 13.1 | 5.5 |
| 12/26e | 26,317.0 | 11,682.5 | 361.37 | 250.18 | 12.4 | 5.6 |
| 12/27e | 27,252.0 | 12,236.6 | 388.39 | 257.46 | 11.5 | 5.8 |
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Research: Healthcare
Herantis Pharma has announced positive FDA feedback and finalised the Phase IIa design for HER-096 in Parkinson’s disease (PD). Following a pre-IND meeting, the FDA raised no concerns on the preclinical package, confirmed that current data would support activation of US clinical sites if an IND is submitted, and considered the Phase IIa design appropriate for this development stage. We view this as a positive step for Herantis, providing a clear path to the first efficacy study of HER-096 and strengthening the package for prospective partners. The randomised, double-blind, placebo-controlled study will enrol c 100 newly diagnosed PD patients not receiving symptomatic medication. Patients will be treated with twice-weekly subcutaneous dosing for six months, followed by a six-month open label extension. The primary endpoint will be a Digital Motor Score, supported by clinical assessments, imaging and biomarkers. More than 50% of the Phase II funding has now been secured or identified.