Imperial Brands remain steady despite regulatory uncertainty

Next generation products are a big focus going forward, despite regulatory uncertainty

Article updated: 27 March 2019 10:00am Author: Graham Spooner

  • Impressive dividends stemming from strong cash conversion help maintain our ‘buy’ recommendation.
  • Revenue growth still expected at the top end of its guidance despite US regulation uncertainty.
  • New focus on next generation products display potential for the company and provides scope for optimism amongst investors.

Tobacco Pipe

Imperial Brands this morning confirmed that the group remain on track to meet revenue and earnings expectations for the year. The recent focus has moved to next generation products such as myblu, and despite US authorities creating some uncertainty with possible bans, the group is seeing good revenue growth in this area. The hope for the sector is that these new products will help offset pressure that tobacco is under, which has been demonstrated by a slight fall in first half demand. Overall revenue growth is expected to be at the top end of its guidance.

Although the shares have been struggling to recover from the sharp falls experienced over 2017 and to a lesser extent last year, investors have often cast aside ethical concerns and concentrated on the good cash conversion, which has led to a long record of dividend increases, with a current yield of around 7.3%.

Our View on Imperial Brands - Buy

We are maintaining our ‘buy' recommendation for medium risk income-seeking investors due to the next generation of products potential and the excellent track record of dividend growth. However, tobacco volumes are falling steadily and the FDA's more aggressive approach to tobacco regulation may act as a drag on share price growth.

If you're looking to invest in any of these companies and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of Tobacco companies and their share prices.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Graham Spooner portrait photo
Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.