BATS Earnings Preview (LON: BATS) – Are Revenue and Profit Both Set To Dip?

With the British American Tobacco share price (LON: BATS) battling to return into positive territory over the past 12 months (-1.57%), the 6.5% gains through 2024 have certainly given holders something to cling to. The next catalyst on the calendar is earnings, with the globally recognised tobacco company poised to release its interim statement next Thursday, 25th July.

For those expecting an uplift in sentiment, the forecasts on the street indicate a downturn in financial performance may be on the radar. Industry analysts from Deutsche Bank predict a 4.4% retreat in half-year revenues, estimating figures to present at £12.85 billion over the course of the previous six months.

The company is also facing a squeeze on profitability. Adjusted profits for the same period are projected to spiral downwards by 6.2%, translating to a figure of £5.65 billion. Consequently, this implies a reduced profit margin by 110 basis points, settling at 43.9%, while earnings per share (EPS) are anticipated to decline by 6.5% to 170.5p.

In spite of the downturn, Deutsche Bank analysts maintain a positive outlook on BATS, recommending a ‘buy' stance on its shares. They have set an ambitious price target of 3,450p, reflecting confidence in the company’s ability to navigate through its current headwinds and realise long-term value for investors.

The broader market sentiment has also been cautious, as evidenced by the impact on London's FTSE 100. The index saw a dip at the open, influenced heavily by a 15% plunge in Burberry's share price. This drop came in the immediate aftermath of the announcement that chief executive Jonathan Akeroyd would be departing his role after a tenure of three years.

As BAT braces itself for a challenging half-year reveal, market watchers would be keen to see how well the company's strategies unfold to address these recent financial setbacks.