Imperial Tobacco's Competitive Advantages Remain Intact

Equity analysts like tobacco firm Imperial's portfolio positioning for the medium to long term, and as such the wide economic moat and stable moat trend ratings remain in place

Philip Gorham 19 August, 2015 | 11:59AM

Imperial Tobacco's (IMT) management statement showed that the firm fell slightly behind our full-year forecasts in the third quarter, but not by enough to impact our fair value estimate of £30 for the ordinary shares. We believe the shares are fully priced. Nevertheless, we like the firm's portfolio positioning for the medium to long term, and our wide economic moat and stable moat trend ratings remain in place.

Imperial has opportunities to grow in the US, but the strategy is risky

Constant-currency revenue rose 2%, although the recent strength in sterling remains a drag, and reported revenue fell by 4%. On a headline basis, Imperial appears to be performing in line with its global competitors, but its top-line growth is skewed more towards price/mix than volume. On an underlying basis, excluding the US deals, volumes fell 6% in the nine months to the end of June, a sequential slowdown from the 5% fall in the first six months.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Imperial Brands PLC1,486.50 GBX-2.11

About Author

Philip Gorham  

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