LONDON – 11 December 2025 – British American Tobacco p.l.c. (LSE: BATS, NYSE: BTI) has quietly turned into one of the FTSE 100’s comeback stories in 2025: the share price is back near record highs, the dividend remains chunky, and management has just extended its share buyback programme to £1.3 billion for 2026 while reaffirming growth guidance. [1]
At the same time, the investment case is still wrapped in regulatory, ESG and litigation risk, plus the slow‑motion decline of cigarettes themselves. Here’s how BTI stock looks right now, based on the latest company updates and analyst forecasts as of 11 December 2025.
BAT stock today: price, performance and yield
On the London listing (BATS), British American Tobacco shares closed around 4,399p on 10 December, just a fraction below their 52‑week high of 4,426p. [2]
Over the last 12 months the London stock has delivered a share price gain of roughly 48%, easily outpacing the FTSE 100’s ~16% rise over the same period. [3]
For the U.S. ADR (BTI), recent prices have hovered in the high‑$50s. Simply Wall St cites a current share price of $58.76, a 55.7% gain over the past year and close to a 52‑week high around $59. [4]
On income, most data providers now cluster BAT’s dividend yield in the 5–5.5% range:
- StocksGuide estimates that BAT paid $3.10 per ADR in dividends for the 2025 financial year, implying a yield of about 5.4% at a $57.41 share price. [5]
- Macrotrends and CompaniesMarketCap put the trailing yield at roughly 5.2–5.3% as of early December. [6]
- On the London line, Hargreaves Lansdown shows a dividend yield of about 5.4% at current prices. [7]
That’s still fat by consumer‑staples standards, but notably lower than the 8–10% yields seen when the stock was deeply out of favour in 2023–24. [8]
On valuation, BATS trades on a price/earnings multiple around 11–12x, depending on the source, putting it on a discount to many global staples but no longer in “distress” territory. [9]
2025 full‑year pre‑close: modest growth, strong cash, guidance intact
BAT’s 2025 Full Year Pre‑Close Trading Update, published on 9 December, is the backbone of every fresh analyst note this week. [10]
Key points from management:
- BAT now expects around 2% revenue growth for 2025 at constant currency.
- Adjusted profit from operations is also guided to grow about 2% for the year.
- “New Category” revenue (vapour, heated tobacco and oral nicotine) is accelerating to double‑digit growth in the second half, delivering mid‑single‑digit growth for the full year.
- Cash conversion remains excellent: operating cash flow conversion is expected to exceed 95% in FY25.
- From 2026 onwards, BAT reiterates its “mid‑term algorithm” of
- +3–5% annual revenue growth,
- +4–6% adjusted profit from operations growth, and
- +5–8% adjusted diluted EPS growth, with 2026 expected at the bottom end of those ranges. [11]
Management also highlighted strong momentum in the United States, which remains the company’s largest profit pool:
- U.S. revenue and profit are improving, helped by solid combustibles pricing and rapid growth in Velo Plus oral nicotine pouches, which are on track to be profitable for the full year and have reached the number‑two position by volume and value in their category. [12]
- Smokeless products (Velo, Vuse Ultra, glo Hilo and others) now account for more than 18% of total group revenue, based on H1 2025 figures. [13]
The market’s verdict on the update has been cautiously positive. While some brokers noted that guiding to the bottom of the 2026 range tempers growth expectations, they also point to the combination of buybacks and dividends as a powerful support for total returns. [14]
£1.3bn share buyback: capital returns in the spotlight
The most market‑moving line in the pre‑close statement was the decision to increase and extend BAT’s share buyback, with £1.3 billion earmarked for 2026. [15]
Recent developments:
- BAT has signed an irrevocable, non‑discretionary agreement with UBS to execute the first 2026 tranche during the closed period from 2 January to 11 February 2026, up to the release of full‑year results. [16]
- Daily “Transaction in Own Shares” notices continue to appear on the London market’s regulatory news feed, reflecting routine buyback activity in December. [17]
When you combine:
- a ~5–5.5% dividend yield, and
- a buyback yield of roughly 1.3–1.4% of market cap per year (based on a ~£95bn market cap), [18]
…you end up with a shareholder payout approaching 7% annually, before any earnings growth – one of the reasons many analysts still treat BAT as a “bond‑plus” income stock. [19]
Cleaning up the balance sheet: ITC Hotels stake sale
Alongside returning cash, BAT is simplifying its portfolio and reducing debt.
In early December, the company sold a 9% stake in India’s ITC Hotels (the demerged hospitality arm of ITC Ltd) for about ₹38 billion (roughly $425 million), via an accelerated bookbuild. [20]
Key details:
- Before the transaction, BAT held a 15.3% stake in ITC Hotels; after the sale, it retains 6.3%. [21]
- The company explicitly describes this holding as “non‑strategic”, and the sale is framed as part of a broader effort to reduce leverage towards a 2.0–2.5x net‑debt‑to‑EBITDA corridor by the end of 2026. [22]
- ITC Hotels’ share price fell around 1–2% on the news, reflecting the size of the block trade. [23]
This follows a $1.5 billion sell‑down of BAT’s long‑held stake in ITC Ltd earlier in 2025, also framed as a debt‑reduction move. [24]
Taken together, BAT is clearly using the 2025 rally and strong cash flows to:
- Trim non‑core assets,
- Pay down debt, and
- Fund ongoing buybacks and dividends
…rather than launching unrelated diversification projects.
New Categories: Velo, Vuse and glo drive the transformation story
The bull case around BAT increasingly revolves around “New Categories” – products that deliver nicotine without burning tobacco.
From BAT’s own science and strategy materials:
- The company describes its vapour, heated tobacco and modern oral products as “reduced‑risk products” relative to cigarettes, based on internal and external evidence, while stressing they are not risk‑free and remain addictive. [25]
- Management is targeting 50 million non‑combustible consumers by 2030 (up from 22 million in 2024) and wants New Category products to reach 50% of group revenues by 2035. [26]
From the 2025 pre‑close and recent trading updates:
- Velo (oral nicotine)
- Strong global growth, with modern oral share in key markets rising sharply.
- In the U.S., Velo Plus has delivered triple‑digit revenue growth and is expected to be category‑profit positive for 2025. [27]
- glo (heated tobacco)
- Revenue is broadly flat this year, as BAT reallocates resources ahead of the glo Hilo premium rollout in Japan, Poland and Italy. [28]
- Vuse (vapour)
- Global value share continues to edge higher in tracked channels, but U.S. and Canadian volumes have been hit by illicit disposable vapes.
- BAT sees recent enforcement actions in the U.S. against illegal vapes as a medium‑term tailwind for legitimate brands like Vuse. [29]
So far, smokeless products still represent less than one‑fifth of revenue, but that share is moving up and, crucially, select segments (like Velo Plus in the U.S.) are now profit‑accretive rather than loss‑making. [30]
Regulatory and ESG headwinds: lobbying, litigation and politics
If the numbers look solid, the discount at which tobacco stocks like BAT trade is largely about regulation, health and politics, not spreadsheets.
Recent 2025 headlines illustrate why:
- A report by anti‑tobacco groups STOP and Contre‑Feu accused EU institutions of under‑reporting meetings with tobacco majors, including BAT, and highlighted attempts to use EU influence to challenge tobacco control measures in countries like Singapore, Saudi Arabia and Mexico. [31]
- The Global Tobacco Industry Interference Index 2025 and its Europe sub‑index continue to flag BAT and peers for intensive lobbying and political engagement, arguing that this undermines implementation of the WHO Framework Convention on Tobacco Control. [32]
- In North America, BAT and Reynolds American are defending litigation over “carbon‑neutral” marketing claims for Vuse, with the companies arguing that their statements were accurate and independently certified. [33]
These sit on top of existing issues:
- A $629m U.S. settlement in 2023 over historical North Korea sanctions violations and a near $8bn impairment related to Canadian class‑action litigation, both of which still haunt valuation discussions. [34]
- Ongoing investigations and criticism around supply‑chain practices, including labour conditions on tobacco farms. [35]
For many institutional and retail investors, tobacco is simply excluded on ethical or ESG grounds. For everyone else, this regulatory overhang is a structural reason BAT’s P/E multiple is likely to stay lower than those of non‑tobacco consumer brands, even with robust cash flows.
Governance: surprise CFO exit adds a small question mark
Governance risk got a fresh jolt in August 2025, when Chief Financial Officer Soraya Benchikh stepped down with immediate effect after about 15 months in the role. [36]
- Benchikh had overseen a period in which BAT’s share price rose more than 80%, and H1 profit beat expectations thanks to U.S. growth returning for the first time in three years. [37]
- Analysts at JPMorgan and Panmure Liberum called the move “unexpected” and “unfortunate”, praising her role in restoring financial discipline and resuming buybacks. [38]
- Javed Iqbal, previously interim finance head, is back as interim CFO while the board searches for a permanent replacement. [39]
So far there is no sign of a strategic U‑turn, and the December pre‑close update sticks firmly to BAT’s existing transformation narrative. But for risk‑averse investors, abrupt C‑suite turnover is another reason to demand a higher yield and lower multiple.
What do analysts and models say about BTI stock now?
Analyst and model‑driven views are not unanimous, but they rhyme.
Valuation & growth models
- Simply Wall St’s discounted cash‑flow model reckons BTI is trading about 28% below its estimate of fair value, with earnings forecast to grow around 16% per year, but flags high leverage and a dividend that is “not well covered” by earnings under its methodology. [40]
- StocksGuide aggregates 15 analyst sales forecasts and pegs 2025 revenue around $34.6bn, essentially flat year‑on‑year, before growth picks up to the low single digits from 2026 onward, with EBITDA margins holding near 48%. [41]
Price targets
The picture gets more mixed when you look at 12‑month price targets:
- MarketBeat’s compilation of U.S. ADR targets shows an average target of about $51, implying double‑digit downside from current prices, with a range from $40 to $62. [42]
- StockAnalysis, which tracks a smaller U.S. analyst set, reports a “Strong Buy” consensus with a $62 target, implying mid‑single‑digit upside. [43]
- A broader international dataset from StocksGuide finds an average target of $62.04 (based on 16 analysts), with roughly 63% “Buy”, 26% “Hold” and 11% “Sell” recommendations. [44]
In other words, some brokers now see BTI as fair value to slightly overvalued after the rally, while others still see modest upside from here – nobody is calling it an obvious bargain any more.
Dividend‑focused commentary
Dividend and income‑oriented analysts remain more enthusiastic:
- A late‑September Seeking Alpha piece still described BAT as an “undervalued dividend machine”, highlighting a yield close to 5.8% and strong free‑cash‑flow coverage at under 12x 2025 earnings. [45]
- Several long‑term dividend studies show that BAT has increased or maintained its dividend for decades, with three‑year dividend growth running at about 1–3% annually, depending on the measure used. [46]
Investment case in one view: strengths vs risks
Put together, the latest 2025 news flow sharpens the trade‑off around British American Tobacco stock:
What’s going right
- Cash‑rich, modestly growing business
- 2025 revenue and profit growth guided at ~2%, with acceleration from 2026 based on the mid‑term algorithm. [47]
- High, mostly sustainable shareholder payouts
- Dividend yield around 5–5.5%, with small, steady increases.
- £1.3bn buyback lined up for 2026, on top of ongoing repurchases in 2025. [48]
- Smokeless transformation is working, if slowly
- New Categories are growing faster than the group average and edging towards material profitability, especially in oral nicotine. [49]
- Balance sheet de‑risking
- Proceeds from the ITC and ITC Hotels stake sales are being used to move leverage back into the target range. [50]
What keeps the discount in place
- Secular volume decline in cigarettes, even if pricing and premiumisation cushion the hit. [51]
- Regulatory, litigation and ESG pressure – from EU lobbying controversies to ongoing class‑actions and the possibility of tougher flavour and nicotine rules in key markets. [52]
- CFO turnover in 2025 that raises questions about finance‑function stability, even as strategy stays on track. [53]
- And, after a 50%+ share price rebound in a year, valuation is no longer distressed – the market has already repriced some of the pessimism away. [54]
Bottom line: where BTI stands as of 11 December 2025
As of today, British American Tobacco looks less like a deep‑value turnaround and more like a mature, high‑yield compounder:
- Low‑to‑mid single‑digit growth,
- A roughly 5%+ cash yield from dividends,
- Additional support from buybacks and gradual deleveraging, and
- A slow but genuine shift towards reduced‑risk nicotine products, which might eventually soften regulatory blowback but won’t erase it.
For investors comfortable with the ethical and regulatory baggage of tobacco, 2025’s news – the £1.3bn buyback, ITC Hotels stake sale, and reaffirmed 2026 guidance – reinforces the view that BAT is using its cash gusher to pay down debt, shrink the share count and fund a sizeable, growing dividend. [55]
For those wary of long‑term health policy, ESG exclusion or litigation risk, the recent rally and mixed analyst targets strengthen the opposite conclusion: much of the easy upside has been harvested, leaving BTI as a solid but not spectacular income stock with stubborn structural risks attached.
Either way, the next big checkpoint is BAT’s full‑year 2025 results on 12 February 2026, when investors will see whether today’s guidance and New Category optimism show up in hard numbers. [56]
References
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