British American Tobacco OUTLOOK
Let's start from the fact that we all see a diamond shape (reversal pattern) in the bottom after major drop from 2018.
Most popular target for BTI is just above $50 where mid-term supply zone is.
Confident growth of the last two months hints at the prospects for an upward exit from the three-year side-trend.
The main risk is the high debt level. The ratio of debt to assets of the company is 54%, which is significant, but not deadly.
As the US enters a cycle of tightening monetary policy and raising the Fed's rate, bond quotes are falling to match key rate forecasts in yields. The stock market as a whole is also declining to provide a risk premium over notional risk-free US Treasuries. But repricing affects individual stocks differently. January showed growth stocks reacting more negatively than stocks with strong cash flows and high dividends.
The S&P 500 has lost more than 4% since the start of 2022, with British American Tobacco shares gaining more than 15% in value.
Shares are generating a high dividend yield of 6.9% per annum, higher than the industry average of 3%.
BTI does not look overbought, with EV/EBITDA of 9.44 versus an industry average of 8.53, and a P/E of 9.35 versus an industry average of 14.59
BTI can play a role of a defensive asset, can be in high demand against the backdrop of another wave of market decline.
Most popular target for BTI is just above $50 where mid-term supply zone is.
Confident growth of the last two months hints at the prospects for an upward exit from the three-year side-trend.
The main risk is the high debt level. The ratio of debt to assets of the company is 54%, which is significant, but not deadly.
As the US enters a cycle of tightening monetary policy and raising the Fed's rate, bond quotes are falling to match key rate forecasts in yields. The stock market as a whole is also declining to provide a risk premium over notional risk-free US Treasuries. But repricing affects individual stocks differently. January showed growth stocks reacting more negatively than stocks with strong cash flows and high dividends.
The S&P 500 has lost more than 4% since the start of 2022, with British American Tobacco shares gaining more than 15% in value.
Shares are generating a high dividend yield of 6.9% per annum, higher than the industry average of 3%.
BTI does not look overbought, with EV/EBITDA of 9.44 versus an industry average of 8.53, and a P/E of 9.35 versus an industry average of 14.59
BTI can play a role of a defensive asset, can be in high demand against the backdrop of another wave of market decline.