British American Tobacco’s first-half results showed a 2% increase in companywide revenue to GBP 12.1 billion, with a flat adjusted operating margin of 44.7%. The US business, accounting for 45% of revenue, improved by 3.7% on a constant-currency basis.

BAT’s US combustibles business saw growth, with volume declines slowing to 7.6% and price increases driving topline growth. The launch of Velo Plus was successful, increasing modern oral revenue by 384% and doubling category share to 13.2%. However, illicit flavored vapes continue to impact the vapor category.

Morningstar raised their fair value estimates on BAT to GBX 4,150/$55 from GBX 4,000/$51, citing a more positive outlook on long-term growth and margin expansion. Forecasting a 5-year average annual revenue growth of 2.4% and an average adjusted operating margin of 46.6%, reflecting improvements in the US business.

Read more at Morningstar: Raising Fair Value on More Positive Outlook