Imperial Brands (AO) | Buy | Black Buffalo: a standalone premium MST brand

Research evidence excerpt

Imperial Brands (AO) | Buy | Black Buffalo: a standalone premium MST brand

Imperial Brands Buy | Target Price: 3350p

Company description Management

Imperial Brand is a global tobacco and nicotine company with brands in over 120 Therese Esperdy, Chairwoman

markets and c. 26,000 employees, focused on combustibles, vapour, heated- Lukas Paravicini, CEO

tobacco and modern oral products. Its combustibles business grew 1.5% CAGR Murray McGowan, CFO

over the past five years and aims to maintain an LSD organic growth as it aims to Key shareholders

offset volume decline with a solid price/mix performance. Its Blu and Zone are Free float 94.95%

the fastest growing categories among the IMB portfolio, aiming to maintain an Capital Research Global Investors 11.96%

annual organic DD through 2030. FMR LLC 7.85% The Vanguard Group, Inc. 6.50%

Investment case Valuation methodology

Imperial Brands is the fourth largest tobacco and alternative Our target price is based on a blended average from target

nicotine provider, with offerings across premium, discount and valuation multiples, DCF and SoP. Our 12-month TP is 3,350p.

deep-discount tiers. It focuses on five developed markets, the Our multiple-based target applies EV/SALES, EV/Adj. EBIT and

US, UK, Spain, Germany and Australia. NGP strategy supports at P/E multiples of c.4x, c.9x and c.11x to our 2026 forecasts.

least an organic DD CAGR in 2026-30, while aiming for resilient Our central case DCF implies a fair value of 3,500p.WACC of

organic LSD growth in combustibles. 7.9%, terminal growth for 0.5% and an EBIT margin of 37% set

Volume growth and positive margin contribution from NGPs for 2040 and declining after 2030.

sales, key products innovation and new launches in the modern Risks to our rating