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.