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(Sharecast News) - RBC Capital Markets lifted its price target on Imperial Brands to 2,400p from 2,100p on Friday.
The bank, which rates the shares at 'sector perform', said encouraging market share and a track record of delivery on expectations give it higher confidence in Imperial Brands' operating profit growth outlook, driving higher estimates.
"We also do not expect management change to lead to new strategy and capital allocation policy, albeit we regret the departure of one of the most successful CEOs we have encountered."
RBC said that over the last year, Imperial Brands has shown good progress in its challenger approach - consistently investing in products, sales teams and data.
"Its improved market share momentum (with aggregate market share gain of +6bps in its five priority markets) and scaling NGP business - especially in the US - give us higher confidence in its ability to improve margin," it said.
"This leads to our higher operating profit estimates over the midterm."
For FY25, RBC forecasts 2.4% organic revenue growth (tobacco + NGP), compared to guidance for low-single-digit growth and Visible Alpha consensus of 2.8%.
It also estimates operating profit growth of 3.9%, compared to guidance for close to mid-single-digit growth and consensus of 4.1% growth.
"Growth should accelerate in the second half, due to the phasing of combustible pricing. That said, we remain dubious about the prospects for the tobacco industry and believe its long-term outlook is already fairly reflected in the current share price, after outperforming the sector by 44% over the last 12 months."
Elsewhere, Canaccord Genuity lifted its price target on CMC Markets to 222p from 192p as it updated forecasts ahead of FY25 results on 5 June to reflect expected trading performance into the end of the year and market conditions in FY26 year to date.
Canaccord said it expects that FY26 has started very strongly for the CFD trading business given the significant spike in volatility at the beginning of April.
Its adjusted diluted earnings per share forecasts are +17%/+61%/-4% versus current Bloomberg consensus in FY25/26/27, respectively. Canaccord said it doesn't appear that the consensus has yet adjusted to reflect recent market conditions.
"As we have written previously, the lack of disclosure at CMC compounds the challenge of forecasting an inherently volatile business model," it said.
"We forecast a FY25-27 adjusted diluted EPS compound annual growth rate of -4%, with FY27 adj. dil. EPS the same as FY22."
Canaccord said the forecast dividend yield of 6% in FY26 falling to 5% in FY27 is not standout, and given the 50% payout policy is subject to volatility.
"The company is currently operating without a CFO and we understand has no plans to fill the role, which is a source of intrigue and concern for us," it said.
"Our long-held view for the CFD sector is to take profits when periods of high volatility deliver super-normal returns, and conversely buy when volatility is low.
"However, even in normal market conditions, give the concerns we have expressed we would rather look elsewhere than CMC for exposure to CFD/leveraged trading."
Canaccord maintained its 'sell' rating on the stock.