Imperial Brands shares hit near two-month high after £1.5 billion buyback launch

Imperial Brands PLC (LON:IMB) shares reached a near two-month high following the announcement of a £1.5 billion share buyback for FY27 and the reaffirmation of FY26 targets. The tobacco maker's stock surged 3.4% to 2,573 pence, surpassing the FTSE 100 index, which declined by around 0.6%. Imperial Brands anticipates low-single-digit tobacco net revenue growth, double-digit NGP net revenue growth, and group adjusted operating profit growth within a 3%-5% guidance range.

The company also expects high-single-digit adjusted EPS growth and over £2.2 billion in free cash flow. This announcement marks the sixth consecutive year of tobacco net revenue growth for Imperial Brands, with pricing gains and market-share improvements in key markets like the U.S. and Germany offsetting slight volume declines.

Jefferies praised the pre-close statement, viewing the shares as attractively valued at 6.5 times calendar-2027 earnings, and noted potential positive reactions to the update. Imperial Brands highlighted strong performance of its heated-tobacco business, including Pulze 3.0 and iD sticks, as well as the expansion of its modern oral portfolio with brands like Zone and Skruf, and recent acquisitions such as Black Buffalo in the U.S. and Helwit in Sweden.

Adjusted operating-profit growth is expected to remain within the 3%-5% target range, while adjusted EPS is forecasted to grow at a high-single-digit rate. The company has returned nearly £13 billion to shareholders through dividends and buybacks from FY21 to FY26, reducing its issued share capital by over 21% since the buyback program commenced in October 2022.

Imperial Brands remains confident in delivering at least £320 million in savings by 2030, including manufacturing initiatives that aim for a £100 million reduction in overheads.