What next for the British American Tobacco (BAT) share price?

July 26, 2023 08:30 PM AEST | By Invezz

What next for the British American Tobacco (BAT) share price? — Image source: Invezz

Strong financial results

British American Tobacco reported strong financial results on Wednesday. In a report, the company’s revenue for the first year jumped by 4.4%, helped by the 26.6% increase in its new categories business that jumped by 26%.

The firm hopes that its new categories revenue will be about £5 billion. Most importantly, this revenue has now risen to 16.6% of the combined revenue. This category is made up of vapour, THP, modern oral, and traditional oral sticks.

BAT’s revenue jumped to over £13.4 billion while the operating margin jumped to 44.2%. The diluted EPS jumped to 176 pence in the first half of the year.

BAT and other tobacco companies are in a battle for their survival as the number of cigarette smokers drop. As I wrote here, the number of smokers in most countries has been falling in the past decades.

Therefore, these companies are diversifying their businesses and boosting product prices. They are mostly diversifying in key products like vapes, which are seen as being safer than traditional cigarettes.

While new categories business is growing, it is still not profitable. For BAT, the first half of the year marked an important period as losses in this category faded. In a statement, the CEO said:

“We are making great progress in New Categories. Revenues are up by 29% and we are now close to breakeven, with consumers of Non-combustible products up by 1.5 million versus FY 2022. While it’s encouraging to see continued good performance in Vapour and Modern Oral, we recognise more work is required in heated tobacco.”

BAT share price forecast

BATS stock chart by TradingView

BAT stock price bottomed at 2,482p, where it struggled to move below several times this year. Now, the shares have made a strong recovery and moved above the 50-day moving average. It rose and is now hovering at the 100-day exponential moving average.

Further, the Relative Strength Index (RSI) has moved close to the overbought level. Also, the stochastic oscillator moved to the important level of 80. Therefore, the shares will likely continue rising as buyers target the next resistance level at 2,945p, the highest point on April 26th.

The post What next for the British American Tobacco (BAT) share price? appeared first on Invezz.

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