The British Tobacco shares of America have joined the lowest level in more than four years on news about potential ban on the USU menthol cigarettes, which would eliminate products such as Newport that produce as much as quarter of company profits.
The stock fell as much as 11% in London, destroying a market value of 8.4 billion pounds ($ 10.8 billion). The Commissioner for Food and Drug Administration of the United States Scott Gottlieb intends to follow new tobacco restrictions, Wall Street Journal reported at the end of Friday, identifying senior agency officers. That could remove a gap in a taste ban that has allowed menthol cigarettes to continue to be sold.
"BAT is the most exposed name to the potential risk," wrote Richard Taylor, an analyst at Morgan Stanley, who estimates that US menthol cigarettes account for 25% of the total earnings.
The potential ban can step up the FDA campaign against youth smoking. Locker cigarettes were installed from the market and so on, and now the agency is taking a more stringent approach to other options as well. The FDA can set limits on selling a number of e-cigarette products in the US, a senior officer told Bloomberg News last week.
The FDA has been targeting flavored tobacco products, as studies show that young people who smoke menthol cigarettes are consuming almost twice as many weeks of & # 39; compared to non-mentor users. Not all analysts believe that a ban is likely. Jefferies analyst Owen Bennett said that such a move is unlikely and would take years to operate.
It is likely that tobacco companies would pose a legal challenge that would delay the process, said Gerry Gallagher, an analyst at Deutsche Bank, too.
The decline in the BAT shares shows that while the Strike Lucky maker is expanding into vapor and tobacco-heating products, the company is still a cigarette business. Traditional products make up most of their revenue. The company did not respond immediately to a request for comments.
Newport is the largest BAT menthol brand and accounts for about 40% of US sales, according to Duncan Fox, an analyst at Bloomberg Intelligence. Exception tobacco companies won for menthol, the most popular and smoked taste cigarette by men, when federal law banned other flavors in 2009.
BAT shares have fallen by 40% this year, the biggest reduction in at least two decades. Only two annual decreases have been received in the past 19 years.
Imperial Brands rejected as much as 5%. Winston wins around 15% of earnings from menthol brands such as Kool and Salem in the United States, according to Jefferies. The share is approximately 20% for Altria Group, which sells a mentel version of Marlboro cigarettes in that market, according to the company. Altria dropped 3% on Friday after the report.
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