British American Tobacco saw a rise in revenue and profit growth in the US for the first time since 2022, with companywide revenue up 2.1% and a flat adjusted operating margin of 44%. The company’s focus on reduced-risk products is paying off, with market share in the US growing to 18% from 11.6%.

The launch of new premium products like glo Hilo and Velo Shift is expected to strengthen BAT’s offerings in heated tobacco and nicotine pouches. Vape innovations such as Vuse Ultra and efforts to combat illicit markets are set to boost the company’s performance. BAT aims for 4%-6% annual profit growth in 2026.

Maintaining a fair value estimate of GBX 4,350/USD 58, Morningstar believes BAT’s stock is fairly valued after a 30% rally in the past year. Despite tough comparisons and challenges in certain regions, the company’s focus on capital return and reinvestment in reduced-risk products sets it apart from competitors like Philip Morris.

BAT plans £1.3 billion in share repurchases in 2026, contrasting with Philip Morris’ focus on deleveraging. Both companies prioritize reinvestment in reduced-risk products. Morningstar’s analysis highlights BAT’s medium-term guidance and the potential for further growth in the company’s US business.

Read more at Morningstar: British American Tobacco Earnings: Shares Fairly Valued as Performance Returns Toward Algorithm