Key Morningstar Metrics for Imperial Brands
- : £33Fair Value Estimate
- : ★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
On April 14, Imperial Brands IMB provided a trading update on first-half results, guiding toward low-single-digit growth in tobacco and next-generation product, or NGP, net revenue. The company will release detailed first-half results on May 12.
Why it matters: Shares were down 5%, as we think the market was concerned about market share loss in Imperial’s top five tobacco markets and commentary about increased promotional activity in the US nicotine pouch market. However, we don’t think this justifies the market reaction.
- In recent years, Imperial has successfully stabilized market share in its top five markets. Because the expected market share loss comes from a focus on profitability, we aren’t that concerned. We’re encouraged Imperial expects adjusted operating profit growth for tobacco for the year.
- Reflecting its fast follower strategy, tobacco is far more important to Imperial’s valuation, so we aren’t concerned by the slow start to NGP in the first half. Moreover, the company expects sales to accelerate in the back half. The long-term potential of NGPs is undented.
The bottom line: As we wait for wide-moat Imperial Brands to announce full first-half fiscal 2026 earnings, we maintain our fair value estimates of £3,300/USD 44. Imperial maintained full-year guidance, including low-single-digit tobacco and double-digit NGP net revenue growth.
- Shares were down 5% on the update, pushing the stock near attractive territory. We forecast five-year average annual adjusted operating profit growth of about 2%, below the company’s long-term target of 3%-5%. We think the market is starting to price in next to no growth.
