BAT's Half-Year Results Test the Credibility of Its 2026 Targets

British American Tobacco shares enter Tuesday’s half-year trading update nursing a 6.37% weekly loss, with the stock closing at €52.66 on Friday — down 2.12% on the day and trading below its 50-day moving average. The slide has brought the equity roughly 8% off the 52-week high of €57.18 touched on 18 May, even though the stock still shows a year?to?date gain of 9.37%. Against that backdrop, investors will be paying close attention when the company releases its first?half figures at 07:00 BST, followed by a conference call with CEO Tadeu Marroco, interim CFO Javed Iqbal and investor relations head Victoria Buxton at 08:30 BST.

The central question is whether management will reaffirm the full?year guidance issued in February. BAT has targeted organic revenue growth of 3% to 5% at constant exchange rates for 2026, with its so?called New Categories — smokeless nicotine products beyond traditional cigarettes — expected to post low double?digit expansion. On the profitability front, the group is aiming for a 4% to 6% increase in adjusted operating profit, with the weighting skewed toward the second half. Any deviation from these targets would carry significant weight given the structural decline in global cigarette volumes, forecast to shrink roughly 2% this year.

Alongside the operational update, capital allocation will be in the spotlight. BAT is in the midst of a £1.3 billion share buyback programme that runs until 29 June 2026. Between 18 and 22 May, the company repurchased 562,557 of its own shares through Merrill Lynch International. Meanwhile, the group’s dividend remains a key draw for income?focused shareholders. For fiscal 2025, BAT paid a total dividend of 245.04 pence per share in four equal quarterly instalments of 61.26 pence. The next payout is scheduled for 14 August, with an ex?dividend date of 9 July. The company also continues to target an operating cash?flow conversion rate above 95% and intends to keep net debt in a range of 2.0 to 2.5 times adjusted EBITDA.

Should investors sell immediately? Or is it worth buying British American Tobacco?

Analyst sentiment has been cautiously constructive. On 26 May, Barclays raised its price target on BAT from 49.00 to 54.00 pence and reiterated an “Overweight” rating, citing the company’s operational restructuring and robust cash generation. The call stands as a notable vote of confidence ahead of the update, but the recent share?price softness suggests the market may be demanding proof that the transformation — including the ambition to become predominantly smokefree by 2035 — is on track.

Tuesday’s numbers will therefore serve as a key milestone. If BAT sticks to its 2026 guidance, the existing bullish thesis holds; a downgrade would send a very different signal about the pace of its transition and the sustainability of its payout policy. The stakes are high, and the conference call will be the first opportunity for Marroco and his team to address the sell?off head?on.

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