Weak Pound And BAT Gains Boost FTSE 100

British American Tobacco was one of the top performers in the FTSE 100 on Thursday, as the weaker pound helped to boost the London index.

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shareprices.com - Friday, August 04, 2017

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BAT is up by 3.1 percent, to £50.04, which is the highest level since the US FDA’s announcement that it was considering cutting nicotine levels in cigarettes down to levels that would not be addictive. Analysts at JPMorgan Cazenove said that the initial worries about FDA regulation had been excessive, and that the decision is not a full on attack against the industry, rather it is an attempt to encourage people to switch to other novel nicotine products.

The FDA is taking a science based approach which highlights policy errors, and the tobacco sector could become more attractive after a conversion to more modern products.

BAT is in a good position to become the fastest growing member of the staples sector thanks to its smokeless tobacco brand, called Glo. The Reynolds unit in the US will also help to grow the company, and improve its free cash flow. JP Morgan put a price target of £56.10 on BAT.

Meanwhile, a retreat for the sterling, which had recently touched an 11 month high, has also helped to boost the FTSE 100. Overall, the index added 0.9 percent, up 63.34 points, with Next topping the risers charts - adding 9.7 percent after the publication of its half-year results, which showed that there had been an unexpected increase in the amount of full-price sales.

 

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