BofA Upgrades Imperial Brands to Buy Amid Fading Australia Headwind; Estimates Revised

05:56 AM EDT, 07/16/2026 (MT Newswires) -- BofA Global Research upgraded Imperial Brands' (IMB.L) rating, noting that the British tobacco company's share loss concerns seem "overdone" as the headwind from high-margin Australia eases. "We believe the market is underestimating the significance of Australia's drag on IMB's EBIT growth in 1H26, which BofA estimates at c2-3%. Australia is one of the group's most profitable markets (above group average) and has been the largest contributor to recent earnings disappointment, we believe, with revenues declining by an estimated c45-65% in 1H26 (BofAe). However, following several years of decline, Australia now represents only c1% of Tobacco & [Next Generation Products] revenues and therefore should represent much less of a drag going forward," the research firm said Wednesday, adding the share price weakness serves as an "attractive entry point." As such, analysts upgraded the stock to buy from neutral, reflecting their confidence that the group will meet its fiscal 2026 EBIT growth guidance of 3% to 5%. BofA added that it sees upside potential to the fiscal 2027 consensus as one-off pressures clear and ongoing cost savings bolster EBIT. "Share price momentum and investor confidence should improve, as we expect FY26 results in November to reassure on the group's growth algorithm and as investors start to look towards a stronger FY27. We make small changes to our forecasts, update FX, and leave our [price objective] unchanged at 3,200p (c20% upside)," the note said. The research firm also trimmed its earnings estimates, including net revenue and adjusted EPS, for fiscal 2026 through 2028.