According to analysts from Jefferies, two decades from now, there may be no smokers in the market. Tobacco firms and governments happen to be on the same side in this shift, especially now that more countries are adopting smoke-free targets and companies are advocating for smokers to use alternative products such as oral nicotine and vaping.
In a note, one of the analysts, Owen Bennett, stated that as tobacco ambitions and regulators align, no smokers in a generation may become a reality, adding that the only way to achieve this would be through RRP support.
Analysts aren’t the only ones having this opinion. Citigroup Inc., which is also of the opinion that cigarettes may become obsolete, expects that by the year 2050, smoking will have disappeared from various parts of Latin America, Australia, some parts in Europe and the United States, if the declining trend that has been observed in the recent years continues.
A statement by Citigroup Inc. analyst Adam Spielman notes that in the last five decades, there has been a decline in smoking due to what is known as the ESG Squeeze, or taxation, regulation and pressures from societal attitudes.
Since the beginning of 2020, the MSCI World Tobacco Index has performed well below the expectation of the wider MSCI World Index, as Imperial Brands Plc lags behind and Swedish Match AB, which manufactures smokeless tobacco products, performs better.
Bennett noted that in the shift to smoke free, Imperial Brands would struggle due to the company’s overreliance on legacy assets in the United States and Europe. He then proceeded to downgrade his rating on the company’s stock from buy to hold.
On the other hand, Bennett stated that well-placed firms included Philip Morris International Inc., which is a manufacturer and seller of tobacco, cigarettes and products that contain nicotine and dominates the market, and British American Tobacco Plc, which recently ventured into marijuana. He then proceeded to upgrade his recommendations on Altria Group Inc. and BAT from hold to buy.
He asserted that if the introduction of RRP did bring about an end to smoking, growth should be just as good, especially if big tobacco is still getting its fair share, if it wasn’t better than the past.
As the number of smokers goes down as predicted by analysts, the effects of infectious diseases such as COVID-19 on patients are likely to be less severe since smoking weakens the lungs and the coronavirus can deliver a death blow once it encounters such weakened lungs, especially when the infection isn’t detected early. Fortunately, XPhyto Therapeutics Corp. (CSE: XPHY) (OTCQB: XPHYF) (FSE: 4XT) successfully validated a rapid and accurate PCR COVID-19 test device that will dramatically reduce the time it takes for one to get results after samples are taken.
NOTE TO INVESTORS: The latest news and updates relating to XPhyto Therapeutics Corp. (CSE: XPHY) (OTCQB: XPHYF) (FSE: 4XT) are available in the company’s newsroom at https://ibn.fm/XPHYF
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