London, May 14, 2026, 10:09 BST
British American Tobacco climbed on Thursday, hitting 4,899.5 pence in London—right up at the peak of its 52-week range. Traders seemed to be rethinking the U.S. legal and regulatory outlook as the company pivots toward vapes and nicotine pouches.
Timing is critical here. BAT has been weighed down by legacy sanctions exposure—one of its two major U.S. headaches. The other: a murky outlook for non-cigarette nicotine products, the category BAT is banking on as cigarette sales keep sliding over the long haul.
A U.S. judge threw out the Justice Department’s criminal case against BAT on Monday, following the government’s confirmation that the company fulfilled the terms of a three-year deferred prosecution agreement tied to cigarette sales in North Korea. Such agreements let firms avoid prosecution if they stick to certain rules.
The Justice Department said BAT “fully complied” with the April 2023 agreement, paying roughly $630 million in penalties and forfeiture and overhauling its compliance procedures. That case marked the department’s biggest penalty connected to North Korea sanctions violations. Reuters
Help also arrived out of Washington. On May 8, the Food and Drug Administration announced it won’t prioritize enforcement against specific unauthorized e-cigarettes and nicotine pouch products while their premarket applications are pending—assuming they meet certain criteria. Still, the FDA noted that this doesn’t guarantee those products will ultimately get the green light.
That detail matters for BAT’s Vuse vapes and Velo nicotine pouches. Both fall into what’s known in the industry as “new category” products—non-cigarette nicotine offerings that firms argue could make up for shrinking cigarette sales.
Earlier this week, Investing.com noted a 4.87% surge in BAT’s U.S.-listed shares on Monday following the FDA guidance. Philip Morris International picked up 4.26%, while Altria added 2.57%, a sector-wide reaction from investors.
These companies are going head-to-head. Philip Morris has Zyn, Altria owns On!, and BAT is working to boost Velo in the U.S. oral nicotine market. Back in February, Reuters said Velo had climbed to the number two spot in U.S. volume and value share, trailing only Philip Morris’s Zyn.
Analysts aren’t sitting still either. BofA Securities’ Bastien Agaud bumped his BAT target up to £53 from £47 on Wednesday, StreetInsider reports, sharpening the market’s focus on just how much regulatory easing is baked into the stock.
BAT’s been making the case that its next-gen products aren’t just for show. Back in February, CEO Tadeu Marroco touted “excellent results” from Velo Plus in 2025—triple-digit revenue growth, with Velo climbing to No. 2 in U.S. market share by both volume and value. BAT
Even so, the company hasn’t backed off its cautions about 2026. Back in December, BAT flagged that revenue would likely come in at the low end of its 3% to 5% medium-term range, and guided adjusted operating profit toward the bottom of its 4% to 6% target. The culprit: ongoing headwinds from unregulated vape products in the U.S. Marroco summed it up at the time: “I’m trying to be cautious for 2026.” Reuters
The market may be outpacing regulators here. The FDA’s guidance doesn’t amount to a marketing authorization, and ex-FDA tobacco chief Mitch Zeller called the policy “fundamentally unfair” for companies that held products back, waiting for the agency’s decision, he told STAT. Public-health groups aren’t on board, either—they argue that having an application in limbo shouldn’t shield companies from enforcement. STAT
BAT’s legal situation looks clearer, and its U.S. regulatory climate is less murky than it was just a week back. The bigger challenge looms: will this sense of relief actually translate into authorized products, more shelf presence, and real growth? Or is this just another solid week for the stock, nothing more?
