Last Update 26 Nov 25
Fair value Increased 3.58%IMB: Future Returns Will Likely Depend On Execution And Shareholder Returns Plans
Imperial Brands' fair value price target has increased from £33.19 to £34.38 per share, as analysts updated their outlook based on improved revenue growth expectations and several recent upward revisions to price targets by major institutions.
Analyst Commentary
Recent analyst updates on Imperial Brands highlight both ongoing optimism and circumspect caution regarding the company's near-term outlook. Several major institutions have revised their price targets upward, citing improvements in financial performance and clearer execution of strategy. However, some reservations persist about competitive positioning and sector-specific challenges.
Bullish Takeaways- Bullish analysts have raised their price targets, reflecting increased confidence in Imperial Brands' revenue growth trajectory and operational execution.
- Major institutions have maintained positive ratings, suggesting that Imperial's current valuation continues to offer attractive upside relative to recent performance improvements.
- The company has demonstrated consistent upward momentum in its price targets throughout multiple updates. This indicates sustained market belief in its ability to deliver on growth initiatives.
- Imperial's proactive approach to strategic initiatives has been credited with building further investor confidence and underpinning upward target revisions.
- Bearish analysts maintain more cautious ratings, signaling ongoing concerns about the pace of market share recovery within a competitive sector.
- Recent target increases, while positive, still reflect some reservations about margin sustainability given industry regulatory risks.
- There remains uncertainty around the long-term impact of changing consumer preferences and regulatory headwinds. These factors could temper future growth prospects.
- Some price targets reflect only moderate upside, suggesting that anticipated improvements may already be priced into the shares by some market participants.
What's in the News
- The Board of Directors of Imperial Brands PLC has authorized a share buyback plan as of October 7, 2025. (Key Developments)
- Imperial Brands announces a share repurchase program of up to £1,450 million, aiming to return value to shareholders. The program is valid until October 28, 2026. (Key Developments)
- Imperial Brands is actively seeking bolt-on acquisitions, particularly in next-generation products. CFO Lukas Paravicini confirmed that merger and acquisition activity will complement organic growth, with focus on markets where next-generation products are established. (Key Developments)
Valuation Changes
- Fair Value Price Target has increased from £33.19 to £34.38 per share, reflecting a modest upward revision.
- Discount Rate has risen slightly from 8.50% to 8.54%, indicating a marginal adjustment in perceived risk.
- Revenue Growth forecasts have improved, with the expected decline moderating from -18.0% to -17.5%.
- Net Profit Margin projections have decreased from 25.18% to 23.17%, suggesting slightly lower anticipated profitability.
- Future P/E Ratio has moved down from 13.68x to 13.41x, pointing to a marginally lower valuation of future earnings.
Key Takeaways
- 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.
- 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 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.
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