Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Could Imperial Brands' shares recover?

A look ahead to the tobacco giant’s figures out this week

Source: Bloomberg

Imperial Brands unveils half-year figures this week. The tobacco giant is making headway in moving customers onto its next generation vaping products but has been hit by currency headwinds.

The company said at its pre-close trading update in April that it is on track to meet analyst expectations for the full-year. However, first–half operating profits are expected to remain at the same level as last year in a constant currency basis. Revenues have been hit by the company’s expensive exit last year from the Russian market, as well as its major investment in its vaping product portfolio.

What’s more, the so-called ‘Covid unwind’ is still affecting its profit levels. Customers tended to smoke more during the Covid lockdowns and this theme is lessening now as life returns to normal. Currency fluctuations are also anticipated to be a 6.5% tailwind on earnings per share in the first-half and 2.5% to 3.5% in the second half.

Imperial: superior pricing?

However, revenues are forecast to pick up in the second half of the year. Meanwhile, analysts are wondering if the company’s superior pricing power will continue amid the inflationary environment. Imperial managed to increase prices by 6% in 2022 to make up for a 4.8% drop in cigarette volumes. Analysts expect volumes to fall by 5.6% this year, while the withdrawal from Russia will also negatively affect this.

“The FTSE 100 firm’s array of key brands, which includes JPS, Davidoff and Gauloises, still confers some degree of pricing power, despite regulators’ restrictions on packaging and advertising,” said analysts at AJ Bell. “Analysts expect an increase in the full-year dividend for 2023 as well, so they will be looking for an advance in the interim payment, too.”

Imperial said in its pre-close statement that pricing remained “robust” and its aggregate market share was “stable” across its five main combustibles markets.

Besides a possible uplift in dividends, analysts will also be looking at the company’s net debt levels, which are expected to fall. In the pre-close update, Imperial said full-year leverage is forecast to remain at the lower end of its 2.0-2.5 range for net debt to EBITDA (earnings before interest, tax, depreciation and amortisation).

Meanwhile, the company says it has paid out just over half its £1 billion share buyback programme - £523 million – which represents 2.7% of its share capital.

Could Imperial’s shares have further to rise?

Imperial’s shares initially had a good run this year – up 10% - but have begun to fall back in the past month. Analysts at Deutsche Bank Aktiengesellschaft, who have a buy recommendation on the shares, set a price target of 2325p in November, while those at Jefferies, who have a hold recommendation, recently set a price target of 1993p.

At 1,885p, the shares are worth buying, not least for the generous 7.5% dividend yield and share buyback programme. The shares are an attractive option given the high inflation environment. Imperial announces half-year figures on Tuesday 16 May.

Past performance is not a guide to future performance


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on stock opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.