June 12, 2019 / 11:30 AM / 4 months ago

BUZZ-British American Tobacco: 'Tasteless' outlook sparks old & new worries

(Adds trader comments, updates shares)

** Cigarette maker British American Tobacco’s shares fall as much as 6.2% to 2,882p; on track for worst day since mid-November

** Stock biggest pct loser on UK’s blue chip index, which is down 0.7%

** BATS warns of steeper declines in cigarette sales globally mainly due to waning demand in its main U.S. market

** Corporate volume share, which represents co’s cigarette market share, down 10bps YTD

** Trader points to some profit taking and some long-term concerns returning to the forefront, adds “Bear in mind that the company provided a ‘tasteless’ outlook”

** Says H1 “New Category” rev growth approaching FY forecast range, which analysts say could suggest some softness

** New category segment consists of tobacco heating products like Glo and e-cigarettes as well as snuff and nicotine pouches

** BATS expects new category rev growth to accelerate in H2, leading to FY growth around mid of 30-50% range vs Jefferies’ estimate of 79% growth in FY

** “All the comments on improvement are weighted to the second half, and the market isn’t in a very forgiving mood,” says another trader

** Including session’s losses, stock has trimmed gains to ~17% this year (Reporting by Yadarisa Shabong and Pushkala Aripaka in Bengaluru, Helen Reid and Thyagaraju Adinarayan in London)

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