British American Tobacco shares retest key level ahead of earnings


British American Tobacco (LON: BATS) share price continued its bullish momentum on Monday as investors waited for the upcoming Q4 and full-year results. The shares rose by over 1%, making it the best performer in the FTSE 100 index. They have risen in the past six consecutive days and are nearing the highest point since January 13.

BAT earnings ahead

British American Tobacco will publish its full-year and fourth-quarter results on Thursday this week. These results will provide more information about the company as the management implements a turnaround strategy. They come at a time when the shares have plunged by over 14% from their highest point in 2022.

In its trading statement in November, BAT estimated that its revenue would grow by between 2% and 4% at constant currency. It also expects that its forex translation tailwind will be about 7% on adjusted EPS growth. The firm benefited from the collapse of the British pound in 2022.

In addition to the headline figures, the BAT share price will react to several details. For example, investors will focus on the performance of its New Categories of business, which includes products like Vuse, glo, and Velo. 

Velo has the number one market share in the US while Vuse Go is the second most popular product in key markets like UK and France. Velo, on the other hand, has the number one share n Europe. Therefore, the annual report will shed more color on these categories.

BAT share price will also provide more color on the impact of its restructuring on its dividend payouts. The company has an annual dividend yield of 6.95%, which is lower than Altria’s 8.02% but bigger than Philip Morris’s 4.95%.

Altria, a big British American Tobacco competitor, announced strong results last week as its revenue came in at $6.11 billion. In the aftermath, it announced a $1 billion share buyback plan. Therefore, using this guidance, we can assume that BAT will also announce strong results.

British American Tobacco share price analysis

British American Tobacco

BAT stock by TradingView

The BATS share price made a slow recovery ahead of its upcoming earnings. As it rose, the stock retested the important resistance point at 3,155p, the lowest point on October 3. A break and retest pattern is one of the most accurate signs of a reversal. The stock remains below the 25-day and 50-day EMAs.

Therefore, I suspect that the stock will retreat after earnings since volume has continued moving downwards despite the recent rally. If this happens, the shares will likely retest the support at 3,100p.

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