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British American Tobacco reports third-quarter results on October 22 with bears pulling back and options traders showing less caution than usual into the print.
The lending market tells a story of disengagement from the short side. Short interest has fallen 15% over the past week and more than 20% over the past month, a sustained retreat rather than a one-day blip. Borrow costs are negligible at 0.37%, and availability is essentially uncapped, with over 645 million shares available to lend against tiny demand. There is no pressure building in the borrow market, and the short score of 25.7 sits comfortably low. The ADR closed at $60.00 on Friday, up 8% on the week and 6% over the past month, continuing a run that a recent ORTEX note flagged as trading near 52-week highs.
Options positioning reinforces the lack of defensiveness. The put/call ratio of 0.54 is slightly below its 20-day average of 0.56, putting it nearly one standard deviation on the call-heavy side. That is towards the calmer end of its past-year range of 0.40 to 0.86. Investors are not paying up for downside protection ahead of this release.
The bull case heading in draws on fundamentals that the recent note captured well: Q3 revenue was up 6% year-on-year at £8.2 billion, price increases absorbing combustible volume declines, and full-year guidance raised. Capital Research holds 17% of shares, BlackRock 8%, and Fidelity 6.5%, all adding modestly in their most recent filings, a base of large holders not rushing for the exit. On valuation, the stock trades on a PE of 11.7x and EV/EBITDA of 10.1x, multiples that have edged up over the past month in line with the price move. The factor score for dividend stands at 99th percentile, a reminder that the income case remains central to the investment thesis. Bears, however, point to the forward earnings picture: the 12-month forward EPS growth score sits in just the 17th percentile, and the ORTEX quality note flags that the stock already trades above the mean analyst price target, with one available target from Argus Research at $62 issued in September 2025.
Analyst coverage is thin on the US-listed ADR. The most recent actionable move was Argus Research upgrading to Buy with a $62 target in September 2025. Jefferies initiated at Buy in July 2025 without a published target. Earlier, UBS upgraded from Neutral to Buy in January 2025. The direction of travel has been constructive, though the coverage base is small and the consensus data is dated.
The October 22 print will test whether the raised full-year guidance can be fleshed out with enough detail on new-category growth and pricing power to justify a stock that has moved sharply higher even as forward earnings estimates remain under pressure.
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