BAT, Imperial Tobacco top FTSE 100 as Credit Suisse reinstates at 'outperform'

16th Jun 2015 10:12

British American Tobacco and Imperial Tobacco rose to the top of the FTSE 100 on Tuesday after Credit Suisse reinstated coverage on both stocks at 'outperform', with target prices of 3,800p and 3,600p, respectively.CS said: "The $7.1bn acquisition of some US brands from Reynolds has the potential to be a game changer for Imperial since it transforms the US business."It added that the deal ticks the boxes for both strategic and financial logic.As far as BAT is concerned, it pointed out that the company has the most consistent track record in consumer staples."With net debt/earnings before interest, tax, depreciation and amortisation over 2.5x following recent M&A, the short-term emphasis will be on debt reduction instead of buybacks," the broker explained in a research note e-mailed to clients.Imperial Tobacco may well receive plaudits for its new-found US exposure, but BAT also now also earns around 20% of its net profit in the US and arguably through a better business in its 42% stake in Reynolds, said CS.At 10:20, BAT shares were up 2.5% at 3,496p and Imperial Tobacco was up 1.3% at 3,216p.