British American Tobacco (BATS.L, BTI) Stock: £1.3bn Buyback Meets Cautious 2026 Outlook as Vuse Fights Illicit Vapes

LONDON (20 December 2025) — British American Tobacco p.l.c. stock has spent the final stretch of 2025 doing what tobacco stocks do best: defying expectations, paying investors, and attracting arguments.

On one side of the ring, BAT is leaning hard into shareholder returns and balance-sheet repair — including a £1.3 billion share buyback for 2026 and continued daily repurchases under its current programme. ^[1]
On the other side: management is telling investors to expect 2026 growth at the lower end of its medium‑term targets, with the biggest pressure point still the U.S. vapour market, where illicit competition has been eating into the legal category. ^[2]

The result is a stock story with two gears: near-term caution on U.S. vaping and regulation, but ongoing cash-return muscle through dividends, buybacks, and asset sales aimed at deleveraging.

British American Tobacco share price today: where BATS and BTI stand into year-end

With markets closed on Saturday, BAT’s latest reference point is Friday’s session.

BATS (London Stock Exchange) closed at 4,236p (£42.36) on 19 December, down 1.14% on the day, with reported volume around 29.5 million shares. ^[3]
BTI (NYSE ADR) closed at $56.45 on 19 December, down 1.03% on the day, based on U.S. price history data. ^[4]

Zooming out, the move that has defined BAT stock in 2025 isn’t Friday’s dip — it’s the broader rerating. Investing.com data shows a roughly mid‑40% one‑year gain alongside a 52‑week trading range of about 2,838p to 4,426p. ^[5]

That rerating matters because it changes the conversation: when a “boring dividend stock” suddenly isn’t boring, the market starts demanding growth narrative proof, not just cash returns.

The headline catalyst: BAT’s December trading update and a “lower-end” 2026

BAT’s most market-moving update this month landed on 9 December 2025: a full‑year pre-close trading statement that kept 2025 expectations intact, but softened the tone on 2026.

BAT says it remains on track for FY2025, pointing to roughly 2% revenue growth (constant currency, before certain adjustments) and similar growth in adjusted profit from operations, alongside >95% operating cash conversion. ^[6]

For 2026, the company reiterated its “algorithm” targets — but flagged that performance is expected toward the lower end:

Revenue: +3% to +5% (lower end expected)
Adjusted profit from operations: +4% to +6% (lower end expected)
Adjusted diluted EPS: +5% to +8% (lower end expected) ^[7]

Reuters’ read-through was blunt: BAT is effectively telling investors that strong nicotine pouch momentum is being offset by tougher conditions in U.S. vapour, with illicit products still distorting the category. ^[8]

This is the heart of the current BAT stock debate: Is 2026 a “back to growth” year — or a “still rebuilding” year? The company’s guidance says “growth, but don’t get greedy.”

Vuse, illicit vapes, and the U.S. vapour problem investors can’t ignore

If you want to understand why BAT stock can rally for months and then stumble on a single update, start with Vuse in the U.S.

BAT has argued that enforcement against illicit vaping products is beginning to help the legal market. In its December update, the company called recent U.S. Vuse volume and revenue improvement “encouraging,” while still acknowledging that the vapour category remains pressured by illicit proliferation. ^[9]

Reuters also highlighted just how large the prize is — describing the U.S. market for smoking alternatives as roughly $22 billion, and noting how unregulated products (often associated with China-made disposables) have dented profits for regulated players. ^[10]

There’s recent historical context here too. In late October, Reuters reported BAT paused a pilot plan related to an unlicensed disposable vape launch (Vuse One) in the U.S. amid FDA action and broader crackdown momentum. ^[11]

For investors, the U.S. vapour story sits at the intersection of regulatory risk and growth optionality:

If enforcement meaningfully reduces illicit share, legal brands can recover volume, pricing power, and margins.
If enforcement is inconsistent, the legal market can remain structurally disadvantaged — even if demand for vaping products grows.

BAT’s own language suggests it sees green shoots, not a clean victory parade.

Modern Oral is the brighter spot: Velo Plus momentum and profitability signals

Where vapour has been messy, Modern Oral (nicotine pouches) has been BAT’s cleaner narrative.

In the pre-close update, BAT pointed to significant share gains in oral categories, including:

Modern Oral share gains in top markets,
“Excellent” U.S. performance, and
Velo Plus driving triple-digit revenue growth in the U.S., with expectation of positive full-year category contribution. ^[12]

The broader category is also benefiting from regulatory formalization in the U.S. On 19 December 2025, Reuters reported the FDA granted market authorization to six on! PLUS nicotine pouch products (Altria/Helix) — described as the first authorization under a pilot program aimed at speeding pouch reviews. Reuters also noted earlier authorizations in 2025 for Zyn products (Philip Morris), underscoring that nicotine pouches are becoming a more “officially regulated” market rather than a regulatory grey zone. ^[13]

Even though that Reuters item isn’t BAT-specific, it matters for BAT investors because it signals:

regulators are building pathways to authorize pouch products, and
competition in modern oral is intensifying — but increasingly inside a regulated framework.

BAT’s bet is that Velo can be a durable franchise as this category professionalizes.

The buyback engine: £1.3bn for 2026, plus ongoing daily repurchases

Cash returns are the gravitational force in BAT stock — and the company just added more mass.

The 2026 buyback extension

A 10 December 2025 BAT press release filed via the SEC set out the mechanics of the £1.3bn 2026 buyback extension:

BAT extended the programme (originally announced in March 2024) by up to £1.3bn for 2026. ^[14]
It entered an irrevocable, non-discretionary agreement with UBS (London Branch) to execute the next tranche. ^[15]
The tranche is expected to run during BAT’s closed period from 2 January 2026 through 11 February 2026, with BAT’s full‑year preliminary results expected immediately after. ^[16]
Repurchased shares are intended to be cancelled, reducing share capital. ^[17]

Alliance News coverage (via the LSE news site) went a step further, explicitly stating BAT expects to publish 2025 results on 12 February 2026, the day after the tranche completion date. ^[18]

The “this is not theoretical” daily buyback flow

BAT also continues to execute under its existing authorizations.

On 19 December 2025, BAT disclosed it bought back 159,774 shares (purchased on 18 December) at a volume-weighted average price of 4,265.90p, with the shares intended for cancellation. ^[19]

For stockholders, this matters less for the one-day share count and more for what it signals: management is still prioritizing capital return even while guiding cautious growth.

Dividend watch: next key dates and what income investors care about

BAT remains one of the market’s heavyweight income names — and the dividend calendar is part of the stock’s near‑term attention.

Dividend tracking data shows an upcoming ex‑dividend date of 29 December 2025 and a pay date of 4 February 2026, with the dividend amount listed as 60.06 GBp (per share, per quarter). ^[20]

Broker research commentary from Hargreaves Lansdown also framed BAT as offering a dividend yield “nearly 6%,” with the company’s cash generation supporting dividends and buybacks — while warning that leverage still matters for how generous capital returns can remain. ^[21]

Deleveraging and asset sales: ITC Hotels transaction adds to the balance-sheet story

BAT’s capital return pitch is paired with a clear parallel objective: reduce debt.

In early December, Reuters reported BAT sold a 9% stake in ITC Hotels for about 38 billion rupees (~$425 million), cutting its holding from 15.3% down to 6.3%. BAT characterized the ITC Hotels holding as non-strategic and linked the move to reducing debt and exiting non-core assets. ^[22]

This matters to BAT stock because leverage is one of the few forces that can meaningfully constrain tobacco-style capital returns. BAT itself has highlighted a goal of moving leverage back into its target range by the end of 2026. ^[23]

Analyst forecasts and price targets: what the Street expects for BATS

Forecasting BAT is tricky because you’re effectively forecasting:

pricing power in combustibles,
regulatory enforcement in vapes,
consumer migration to pouches/heated products,
and currency translation across a global business.

That said, analysts still give investors a map — even if it’s drawn in pencil.

A widely followed consensus snapshot (TradingView, citing analyst inputs) puts the one‑year BATS price target around 4,516.67p, with a wide range from 3,050p (low) to 5,200p (high), and an overall “buy”-leaning analyst rating. ^[24]

Stockopedia data is in the same neighbourhood, with a consensus target just above the current quote (low‑single‑digit implied upside). ^[25]

Meanwhile, Hargreaves Lansdown’s analysis emphasized that BAT’s improved outlook has already driven a sentiment rebound, leaving valuation less forgiving if growth disappoints. HL cited a forward P/E around the low‑teens and a prospective yield in the high‑5% range (sourced to LSEG Datastream) — then warned that regulation and execution risk can still bite. ^[26]

In other words: the market is no longer pricing BAT like it’s in permanent decline — but it’s also not paying for heroic growth.

What bulls and bears are really arguing about in BAT stock right now

Every stock has a narrative battle. BAT’s is unusually crisp.

The bull case: cash + enforcement + category transition

The bullish view — supported by BAT’s own commentary — looks like this:

BAT is still throwing off large cash flows, returning money via dividends and buybacks, while its “new categories” are gaining traction. Management is pointing to improved momentum in the U.S., particularly if enforcement starts shrinking the illicit vapour ecosystem, and highlighting strong growth in modern oral. ^[27]

In this lens, 2026 is less about “explosive growth” and more about stabilizing vapour and scaling oral, while buybacks keep shrinking the share count.

The bear case: vapour uncertainty and regulation never sleeps

The skeptical view is that BAT’s most important growth engine in the U.S. — vapour — is operating in a market where illicit competition is stubborn, and regulatory headlines can change quickly.

Reuters explicitly framed vapour competition and illicit products as central to BAT’s cautious stance on 2026. ^[28]
Hargreaves Lansdown echoed the theme in a different way: even if new categories grow, the industry faces scrutiny and uncertainty about the long-run profitability profile versus traditional combustibles. ^[29]

This camp worries that the stock’s rerating in 2025 leaves less margin for error.

What to watch next: catalysts that could move BATS and BTI

With the year ending, BAT stock’s next big “information drop” is the full‑year results cycle.

Key items to monitor into early 2026 include:

Full-year 2025 results (expected 12 February 2026)
The buyback tranche calendar and LSE reporting point to results the day after 11 February. ^[30]
U.S. enforcement against illicit vapes
BAT is explicitly tying Vuse improvement to enforcement momentum, so investors will watch for hard data and regulator actions. ^[31]
Modern Oral regulatory signals and competitive dynamics
FDA authorizations for pouch products (even for competitors) indicate the category is moving toward clearer, faster pathways — which can reshape market shares and moats. ^[32]
Further deleveraging moves
Asset disposals like the ITC Hotels stake sale are part of BAT’s stated approach to debt reduction alongside shareholder returns. ^[33]
Ongoing buyback pace
Daily repurchase announcements remain a quiet but steady signal of capital-return commitment. ^[34]

Bottom line

As of 20 December 2025, British American Tobacco stock sits at a fascinating intersection: a high-cash-return equity that the market has started believing in again, but with a 2026 outlook that’s intentionally conservative.

BAT is essentially telling investors: “We can fund dividends, buy back stock, and reduce debt — but the U.S. vapour battlefield is still messy, so don’t assume a straight-line recovery.” ^[35]

For Google News readers tracking BATS (LSE) and BTI (NYSE), the near-term story is simple: buybacks and modern oral strength are the supports; U.S. vapour execution is the swing factor.