Broker snap: BATS's optimism impresses

18th May 2011 12:50

Nomura has upped its target price by 5% for tobacco titan British American Tobacco, saying that the company has a commitment to margin progression, good pricing visibility, and improving volume trends.The broker said the group's investor event saw senior management present a "self-assured outlook" on industry trends, and express its confidence on margins of over 35% this year (a year earlier than target) and around 40% by 2014/15."Pricing wise, the company highlights average circa 6% per annum in price increases the last few years and sees this as an ongoing aspirational level," Nomura said.Meanwhile, volumes are expected to recover to -0.5% to flat per annum moving into next year, after being down 2% to 3%.The target price now stands at 2,950p, from 2,800p, while a 'buy' rating is kept. ---BC