Last Update 10 Dec 25

Fair value Increased 0.24%

IMB: Future Returns Will Likely Depend On Execution And Ongoing Share Repurchases

The analyst price target for Imperial Brands has been modestly increased to approximately $34.46 from $34.38, as analysts cite a slightly lower discount rate, a marginally improved long-term revenue trajectory, and a stable profitability and valuation profile.

Analyst Commentary

Recent research updates on Imperial Brands reflect a generally constructive stance, with several price target increases clustered over a short period, which points to improving confidence in the company’s execution and cash generation profile.

Bullish Takeaways

Bullish analysts highlight successive price target increases, particularly the move toward the upper 3,000 GBp range, as evidence that the market may be underestimating the durability of Imperial Brands' earnings and cash flows.
Upgrades from JPMorgan and other bullish analysts emphasize an Overweight and Buy bias. These updates suggest that, at current levels, valuation remains attractive relative to peers given the company’s stable profitability and dividend support.
The upward revisions are tied to expectations of steady long term revenue trends rather than aggressive volume growth. This supports a thesis of reliable, if modest, compounding rather than cyclical volatility.
Analysts also point to incremental operational improvements and capital allocation discipline as catalysts that could narrow the valuation discount versus global tobacco competitors over time.

Bearish Takeaways

Bearish analysts, including those retaining more neutral ratings such as Sector Perform, stress that despite higher price targets, upside is still constrained by slow category growth and long term regulatory headwinds affecting the tobacco sector.
Some caution that the recent target hikes are relatively modest in absolute terms, which implies that much of the improvement in execution and efficiency may already be reflected in the current share price.
There is also concern that reliance on cash returns to shareholders over transformative growth initiatives could limit re rating potential if earnings momentum softens or macro conditions deteriorate.
Furthermore, lingering uncertainty around future product mix shifts and potential pricing pressures keeps a ceiling on how far valuation multiples can expand, even under improved operational performance.

What's in the News

From April 1, 2025 to October 29, 2025, Imperial Brands repurchased 24,407,385 shares, about 2.92% of its share capital, for £726 million, completing a total of 44,404,631 shares, or 5.31%, bought back for £1,250 million under the October 8, 2024 program (Key Developments).
Imperial Brands announced a new share repurchase program of up to £1,450 million, running until October 28, 2026, with the stated aim of returning cash to shareholders (Key Developments).
The Board of Directors formally authorized the latest buyback plan on October 7, 2025, reinforcing the company’s focus on capital returns (Key Developments).

Valuation Changes

Fair Value: risen slightly to approximately $34.46 from $34.38, reflecting a modest upward revision in the intrinsic valuation estimate.
Discount Rate: fallen slightly to around 8.48% from about 8.54%, indicating a marginally lower perceived risk or cost of capital in the updated model.
Revenue Growth: improved slightly, with the projected long term decline easing to roughly -17.43% from -17.45%, signaling a marginally less negative top line trajectory.
Net Profit Margin: edged down marginally to about 23.15% from 23.17%, implying a near flat but fractionally lower long term profitability assumption.
Future P/E: increased very slightly to about 13.42x from 13.41x, consistent with a modestly higher valuation multiple applied to forward earnings.

Strategic focus and strong pricing in key markets enhance revenue growth and margins through brand and sales execution.
Growth in NGP and share buybacks boost earnings, supporting long-term shareholder value and financial confidence.
Persistent challenges in the U.S., high pricing in the U.K., and regulatory risks in Europe could hinder Imperial Brands' revenue growth and profit margins.

Catalysts

About Imperial Brands

Manufactures, imports, markets, and sells tobacco and tobacco-related products in Europe, the Americas, Africa, Asia, and Australasia.What are the underlying business or industry changes driving this perspective?

The company's five-year plan is currently in an acceleration phase, with a strategic focus on increasing aggregate market share in five priority markets, supported by brand strengthening and improved sales execution, which is expected to enhance revenue growth and improve net margins.
Strong pricing and a positive price/mix effect are contributing to significant net revenue growth in both Tobacco and next-generation products (NGP), which should continue to increase overall earnings and shareholder value.
The NGP segment is experiencing broad-based growth in all three categories (vaping, heated products, oral nicotine pouches) and across all regions, leading to improved gross margins and reduced losses, potentially driving future revenue growth and profitability.
The company's ongoing share buyback program has retired 11% of the share capital since 2022, significantly boosting earnings per share (EPS), and the aim of returning £10 billion to shareholders over five years is another driver of EPS growth.
Disciplined capital allocation, including strong operational cash flow, strategic investments in NGP, and a progressive dividend policy, underpins the company’s confidence in continued financial delivery, likely enhancing revenue, operating profit, and long-term shareholder value.

Imperial Brands Earnings and Revenue Growth

Imperial Brands Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Imperial Brands's revenue will decrease by 18.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 13.9% today to 25.2% in 3 years time.
Analysts expect earnings to remain at the same level they are now, that being £2.6 billion (with an earnings per share of £3.7). However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as £2.1 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.7x on those 2028 earnings, up from 9.6x today. This future PE is lower than the current PE for the GB Tobacco industry at 19.4x.
Analysts expect the number of shares outstanding to decline by 0.21% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.38%, as per the Simply Wall St company report.

Imperial Brands Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The U.S. has been more challenging in terms of market volumes, which means future revenue growth could be impacted if these challenges persist.
In the U.K., higher pricing strategies could lead to market share loss, impacting revenues and potentially affecting profit margins if the strategy does not deliver long-term value as planned.
Potential risks of regulatory changes, such as bans on disposable vape products in European markets, could threaten NGP revenue growth if illicit market share is removed or reduced.
While NGP growth is promising, it remains a small fraction of total revenue, lower than competitors, indicating potential vulnerability to external market shifts affecting broader revenue growth.
Foreign exchange translation is expected to be a 1% to 2% headwind to profit, which can negatively impact earnings if currency fluctuations are unfavorable.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £32.229 for Imperial Brands based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £39.0, and the most bearish reporting a price target of just £24.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £10.2 billion, earnings will come to £2.6 billion, and it would be trading on a PE ratio of 12.7x, assuming you use a discount rate of 8.4%.
Given the current share price of £30.84, the analyst price target of £32.23 is 4.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Boost Imperial Brands Target on Strong Margins and Share Buyback Program