British American Tobacco's Second-Half Fiscal 2021 in Line; Stock Still Offers Some Upside

There were few surprises in British American Tobacco's, or BAT's, preliminary 2021 results, with most financial metrics bang in line with our expectations. We are reiterating our wide moat rating and GBX 4,000 fair value estimate for the ordinary shares. Tobacco stocks have staged something of a recovery amid concerns around inflation, and the company is no longer as mispriced as it was three months ago. The strong pricing power demonstrated in these results supports our view that tobacco will remain a safe haven for investors worried about the sustainability of corporate earnings.