After the Biden Administration confirmed an earlier Wall Street Journal report that it will abandon plans to ban menthol cigarettes, Jefferies analyst Owen Bennett said that while the most was widely expected, it now takes the headline risk off the table near-term. The matter could potentially resurface after the election, though if Donald Trump wins, this would be less likely, the analyst tells investors in a research note. The firm noted that the move is a boost in sentiment for British American Tobacco (BTI), Altria (MO), and Imperial Brands (IMBBY), but specifically for British American, which is most exposed. Jefferies has Buy ratings on Altria and British American Tobacco and a Hold rating on Imperial Brands.

Bullish option flow detected in British American Tobacco with 13,934 calls trading, 7x expected, and implied vol increasing over 1 point to 19.80%. May-24 30 calls and May-24 31 calls are the most active options, with total volume in those strikes near 10,100 contracts. The Put/Call Ratio is 0.08. Earnings are expected on July 25th.