BAT at a Crossroads: FDA Inquiry Threatens to Cloud Smokeless Growth Story
05.06.2026 - 18:10:13 | boerse-global.de
British American Tobacco finds itself juggling two very different narratives. On one hand, the tobacco giant has reaffirmed its 2026 targets and raised its guidance for next-generation products, powered by the strong performance of Vuse and Velo. On the other, a political storm is brewing in Washington after six Democratic senators launched an investigation into whether donations from BAT’s US subsidiary influenced a recent FDA decision on e-cigarettes. The stock, which had been riding a 23% twelve-month gain, is now showing signs of stress.
The controversy centres on the FDA’s so-called “enforcement discretion” policy, which allows manufacturers to sell vapes and nicotine pouches without the legally required marketing authorisation. The agency itself has acknowledged that the move could bring hundreds of new products onto the market and was taken after pressure from the White House. Senator Dick Durbin, Elizabeth Warren and four colleagues sent a letter on 4 June to Reynolds American and Altria demanding details of contacts with the Trump administration. They note that Reynolds American recently donated $5 million, while Altria made contributions to Trump’s political orbit. The deadline for a response is 2 July.
BAT had explicitly welcomed the FDA’s prioritisation guidance in its H1 pre-close update on 2 June – just two days before the senators’ letter landed. The company described the policy as a critical step towards expanded market access. That enthusiasm may now be tempered by the prospect of political backlash, with the senators asking how many unauthorised products from Reynolds and Altria could flood the market under the new rules.
Should investors sell immediately? Or is it worth buying British American Tobacco?
The timing could hardly be more awkward. BAT’s management has just confirmed that it expects 2026 revenue growth of 3% to 5% and adjusted operating profit growth of 4% to 6%, both at the lower end of the medium-term range. Yet the real bright spot is the new categories business: the company raised its sales growth forecast for Vuse and Velo into the mid-teens, driven by resilient demand in the Americas and Europe that is offsetting a slower recovery in Asia-Pacific. Even the Middle East, where high raw material costs are weighing on consumer sentiment, is not expected to have a material impact on group earnings.
Analysts are taking a measured view. Bank of America retained its buy recommendation with a price target of 53 British pounds, and UBS continues to advise buying the stock. The bullish case rests partly on BAT’s capital returns: the company is pressing ahead with its £1.3bn share buyback programme and aims to reduce net debt significantly by year-end. Income-focused investors have a date to watch – 9 July 2026 – when the shares will trade ex-dividend, with a payout of 0.61 pounds per share.
A management change adds another layer. Dragos Constantinescu, who is returning from the drinks group Asahi, will take over as chief financial officer on 1 September 2026.
The market’s immediate reaction reflects the clash of signals. Shares closed at 50.92 euros, up 1.27% on the day, but on a seven-day view they have lost 5.34%, landing at 49.85 euros earlier in the week. The RSI of 35.7 suggests the stock may be modestly oversold, and it now sits 13.3% below its 52-week high of 57.50 euros. For now, BAT insists its 2026 targets remain intact, but the 2 July deadline will be the next critical marker – determining whether the FDA policy actually opens the gateway to a larger regulated vape market or whether political headwinds slam it shut again.
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