- Imperial Brands
- 23 May 2025 10:24:41
Source: Sharecast
The bank, which rates the shares at ‘sector perform’, said encouraging market share and a track record of delivery on expectations give it higher confidence in Imperial Brands' operating profit growth outlook, driving higher estimates.
"We also do not expect management change to lead to new strategy and capital allocation policy, albeit we regret the departure of one of the most successful CEOs we have encountered."
RBC said that over the last year, Imperial Brands has shown good progress in its challenger approach - consistently investing in products, sales teams and data.
"Its improved market share momentum (with aggregate market share gain of +6bps in its five priority markets) and scaling NGP business - especially in the US - give us higher confidence in its ability to improve margin," it said.
"This leads to our higher operating profit estimates over the midterm."
For FY25, RBC forecasts 2.4% organic revenue growth (tobacco + NGP), compared to guidance for low-single-digit growth and Visible Alpha consensus of 2.8%.
It also estimates operating profit growth of 3.9%, compared to guidance for close to mid-single-digit growth and consensus of 4.1% growth.
"Growth should accelerate in the second half, due to the phasing of combustible pricing. That said, we remain dubious about the prospects for the tobacco industry and believe its long-term outlook is already fairly reflected in the current share price, after outperforming the sector by 44% over the last 12 months."