London, May 13, 2026, 09:14 BST
- BAT’s London shares were up 1.72% at GBX 4,713.78 early Wednesday, after a 5.82% jump on Tuesday.
- The move is tied to new FDA guidance that lowers near-term enforcement risk for some e-cigarette and nicotine pouch products with pending applications.
- Bulls see a clearer path for Vuse and Velo; bears see only a temporary reprieve, not final U.S. authorization.
British American Tobacco rose again in London on Wednesday, extending a sharp rally that had already made the stock stand out in a weak Tuesday session. Google Finance showed BATS at GBX 4,713.78, up 1.72%, near the top of its early range and not far from its 52-week high of GBX 4,876.92.
The chart moved because investors got a cleaner read on U.S. regulation. The FDA’s new enforcement guidance says it will not prioritize action against certain e-cigarette and oral nicotine pouch products that lack final authorization but have accepted, pending premarket applications; a premarket application is the file companies submit before a new tobacco product can be legally marketed.
That matters more to BAT than to a plain cigarette company. Its growth case is built around Vuse in vapour and Velo in nicotine pouches, while the old combustible business throws off cash but is not where investors expect much volume growth. In February, BAT said Velo Plus had delivered “triple-digit revenue growth” and that Vuse was “well positioned to benefit from stronger enforcement” over time. BAT
The rally was not isolated. Investing.com linked tobacco-stock gains to the FDA guidance and reported moves in Philip Morris and Altria as well, the two key U.S.-listed peers because Philip Morris owns Zyn and Altria sells On!, both direct rivals to Velo in pouches.
The peer read is mixed, though. Imperial Brands, BAT’s closest U.K. comparator, warned on Tuesday that a prolonged Iran war could lift energy and logistics costs, and Reuters said Imperial lost 16 basis points of market share in core markets while prioritizing profitability over volume. That is a reminder: tobacco pricing power is real, but it is not magic.
BAT also got help from a separate legal headline. A U.S. judge dismissed the criminal case tied to North Korea sanctions after the company complied with a three-year deferred prosecution agreement and paid about $630 million in penalties and forfeiture. This does not change the Vuse or Velo model, but it removes an old file from the risk stack.
The bull case is straightforward. If the FDA keeps moving toward a more predictable review-and-enforcement system, BAT has a better chance to shift U.S. demand from illicit or grey-market products into branded channels. Chief Executive Tadeu Marroco said on the February call that he was “extremely encouraged” by Velo’s U.S. performance and that there was “plenty of opportunity” for it to keep growing. Reuters
The bear case starts in the same document. The FDA guidance is not an authorization, and the Federal Register notice states that new tobacco products without premarket authorization remain illegally marketed. Public-health groups have already pushed back, with the Campaign for Tobacco-Free Kids saying the guidance gives large tobacco companies room to keep products on the market without full review.
There is also a youth-use overhang. The American Dental Association and other groups urged the FDA to tighten its approach to flavored e-cigarette applications, arguing that weaker standards could reduce protections for young users. That keeps the politics live, even if the market is pricing relief today.
BAT’s own guidance still has a cap on the enthusiasm. In February, the company reaffirmed 2026 constant-currency targets — growth measured without exchange-rate swings — at the lower end of 3% to 5% revenue growth, 4% to 6% adjusted operating profit growth and 5% to 8% adjusted diluted EPS growth; EPS means earnings per share, or profit divided across the share count.
So the stock is not moving because the company suddenly became a fast-growth consumer name. It is moving because a large regulatory tail risk looks less sharp, while buybacks, dividends and U.S. non-combustible growth give investors enough to pay a higher price for a cash-generative business. Google Finance showed a 5.15% dividend yield and a 13.35 price-to-earnings ratio early Wednesday.
For now, BAT is trading less like a cigarette-volume story and more like a regulatory option on U.S. nicotine alternatives. The next hard test is whether Vuse and Velo can turn this softer enforcement stance into authorized, profitable sales before public-health pressure or slower FDA decisions close the gap again.
