London, April 24, 2026, 12:56 BST
- BAT shares climbed in London as Morgan Stanley upgraded the stock to “overweight” from its previous “underweight” rating.
- BAT is sticking with its £1.3 billion buyback, now switching to weekly repurchase updates as the program continues.
- Pouch growth, the state of U.S. regulation, and lagging corners of tobacco remain on investors’ radar.
Shares of British American Tobacco surged Friday, catching a 3.0% boost to 4,330 pence in late-morning trading after Morgan Stanley shifted its view on the FTSE 100 firm to “overweight” from “underweight.” The upgrade put BAT near the top of the FTSE 100’s leaders, according to Alliance News, on a day when the broader London market lagged. London South East
The call is drawing attention as investors rework how they rank tobacco stocks—cash flow, defensive profits, and who’s got the most riding on rapid-growth smoke-free lines. Morgan Stanley lowered its rating on Imperial Brands, BAT’s UK rival, to “equal-weight.” That split decision sharpened comparisons within a sector pressured by falling cigarette demand and tighter regulation. London South East
BAT hasn’t let up on its share buybacks. According to a regulatory filing on Thursday, the company snapped up 165,340 ordinary shares on April 22 from Banco Santander, paying a volume-weighted average of 4,103.8172 pence per share. Those shares are headed for cancellation, trimming the total number in circulation. A buyback—essentially the company spending its own cash to repurchase its stock—means fewer shares remain outstanding.
Earlier, the company announced Merrill Lynch International would handle ordinary share purchases between April 23 and June 29 as part of its ongoing buyback programme. BAT noted Merrill Lynch would act on its own in trading, with the stated goal to cut back on share capital.
BAT was trading at 4,355.50 pence, showing a 3.55% gain as of 12:41 BST, based on Investors Chronicle data (with a minimum 20-minute delay). The broker’s upgrade gave the shares a lift, and the stock’s defensive reputation offered extra support while the broader market held back.
BAT is sticking with its buyback, keeping shareholder payouts front and center. Chair Luc Jobin, speaking to investors last week, pointed to a 2% bump in the dividend and a £1.3 billion buyback for the year. The company’s leverage, according to Jobin, is still on track to land between 2.0 and 2.5 times by year-end.
BAT is shifting its buyback reporting approach. The company said it will now issue consolidated weekly RNS updates on repurchases, instead of daily notices, following a tweak to UK Listing Rule 9.6.6. Disclosure detail and aggregation stay the same.
Competitive dynamics changed fast. On Wednesday, Philip Morris International trimmed its annual profit outlook, blaming regulatory uncertainty for Zyn nicotine pouches and stiffer competition—BAT’s Velo included. Jefferies analyst Andrei Andon-Ionita flagged further signs of slowing Zyn volumes and added, “Velo will be the likely beneficiary.” Reuters
BAT’s smokeless division is firmly under the spotlight. Back in February, Reuters noted that Velo had edged up to the No. 2 spot in U.S. nicotine pouches, trailing only Zyn; these pouches, slipped under the lip, deliver nicotine—no smoke involved. At the time, CEO Tadeu Marroco called the U.S. results for Velo “extremely encouraged.” Reuters
Imperial is still the other UK stock in this mix. Earlier this month, the maker of Winston and Gauloises flagged market-share declines in its core markets and said first-half profit growth would be modest, which puts more weight on the second half if it wants to meet its goals.
Still, there’s only so much room on the upside. U.S. pouch approvals are far from guaranteed—Reuters noted this month that regulators are examining if fresh products actually help smokers move away from cigarettes without upping risks for kids or non-users. BAT insists its submissions deserve the FDA’s green light and says it’s keeping up talks with the agency.
BAT is cautioning investors to brace for 2026 results coming in at the low end of its current guidance. The group points to the time it will take to steady operations in Asia-Pacific, Middle East and Africa, along with ongoing spending to push new premium products. Jobin flagged a 2% to 3% hit from foreign-exchange translation to adjusted diluted EPS for both the half-year and the full year.
