British American Tobacco Share Price Forecast July 2021 – Time to Buy BATS?
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British American Tobacco plc (LSE: BATS), which has always been considered a 5-star stock experienced a 12.5% increase in its share value in the last 24 hours. The company has achieved revenue growth of 3.3% during the pandemic, with profit growth from operations of 4.8%. It also managed to reduce leverage by 0.3x during the pandemic, possessing an operating cash conversion of 103%. All of these stats have forced investors to look at the shares with renewed interest.
British American Tobacco – Technical Analysis
The financial statement from British American Tobacco PLC reveals a company with a market capitalization of £64.446 billion with total assets worth £137.68 billion. The income statement from 2020 reveals revenue of £25.76 billion with a profit margin of 24.84%. BATS shares closed on June 29th at £2828.5 with an uptrend of 0.44%.
Moving over to the technical information for British American Tobacco PLC and oscillators like Relative Strength Index (14)(56.6), Stochastic %K (14, 3, 3)(43.6), Williams Percent Range (14)(−38.3) and Bull Bear Power(75.2), point towards a neutral action. On the flip side, moving averages such as Exponential Moving Average (10)(2802.6), Hull Moving Average (9)(2802.3), Volume Weighted Moving Average (20)(2796.3) and Hull Moving Average (9)(2802.3) reflect a buy action.
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Recent Developments
British American Tobacco PLC has recently announced its pre-close trading update for the first half of 2021. Expectations from the update include strong operating cash flow conversion exceeding 90%, a revenue growth exceeding 5% and a mid-single-digit adjusted diluted constant currency EPS growth. British American Tobacco PLC expects its non-combustible portfolio to grow twice as much as the current £16 billion in revenues which it generates, that too in the upcoming five years. The company has already established brand leaderships in Switzerland, Denmark, the Czech Republic, and Germany to name a few.
Should You Buy BATS?
The main uncertain factor for investors to consider is the company’s ability to deliver the expected portfolio growth mentioned above. As one of the companies with one of the most far-reaching distribution networks in the world, the initial results look promising for investors. Production volume in the legacy combustible segments continues to occur, which was 4.5% for 2020. However, this doesn’t mean that the company is losing revenue from this sector.
The mainstream assumption due to the decreased volume in the sector is that revenue will be down. However, current revenue growth of 2.8% YoY for 2020 and savings of £660 million make the company stable and moving in the right direction. So investors can consider British American Tobacco PLC a good addition to their portfolio, taking into account its positive company forecasts, historical results, product appeal, market share and cash flows. The company also managed revenue and EPS growth along with above-average cash flow conversion in the midst of one of the most challenging years of the century.
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