BATS Share Price Forecast Ahead of Earnings

Summary:

What is the outlook for the BATS share price ahead of its quarterly earnings? We look at what to expect on British American Tobacco

The BATS share price is in a tight range ahead of the company’s half-year earnings. The British American Tobacco share price is trading at 2,769p, which is substantially lower than its year-to-date high of 2,915p. This values the company at more than $65 billion.

British American Tobacco earnings preview

The BATS share price will be in the spotlight ahead of its half-year results that will come out on Wednesday. Analysts expect that the firm will report a strong quarter thanks to the rising demand for cigarettes as the economy reopens. The return of the global aviation market likely lead to strong sales at duty-free shops.

The results comes a week after Philip Morris published its results. The company’s revenue rose by 14% to $7.59 billion while its profit came in at more than $2.17 billion. The company’s strong performance was also partly due to its smoke-free products like IQOS, which accounted for 29% of net revenue.

During the weekend, the firm said that it would stop selling tobacco products in the UK in the next 10 years. That could be beneficial to British American Tobacco.

Analysts also expect that BAT will report strong results due to its positive trading update delivered in June. They expect that its sales came in at 12 billion pounds, down from 12.2 billion pounds in the previous year. They also see its dividend rising to 53.9p.

So, is the British American Tobacco share price a buy? Analysts believe that the stock is actually undervalued. Those at Morningstar expect that its fair value is at around 4,000p, which is substantially higher than where it is today.

BATS share price forecast

The four-hour chart shows that the BATS share price has been moving sideways recently. It has already found a substantial resistance at 2,860p level. It is also along the 25-day and 50-day moving averages. Further, it has found a strong support at 2,700p. It is also slightly higher than the 38.2% Fibonacci retracement level.

Therefore, the shares will likely break out lower ahead or after its quarterly results. If this is correct, the next key level to watch will be the support at 2,700p. This performance will be in line with how Philip Morris reacted last week after its quarterly results.