Key Takeaways:
- UBS upgraded SMOORE INTL from Sell to Buy, raising target to HKD12.55
- Stock jumped 13 percent to HKD11.6, a five-month high
- FDA's May 2026 flavored e-cigarette policy shift drives the upgrade
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SMOORE Intl surges 13% on UBS Buy upgrade, HKD12.55 target
SMOORE INTL jumped 13 percent to HKD11.6, a five-month high, after UBS upgraded the stock to Buy with a HKD12.55 target.
UBS analyst Christine Peng said the US FDA's May 2026 policy shift allowing legitimate enterprises to launch flavored e-cigarettes could shift consumers from illegal products to legal ones, according to a research report published Tuesday.
The broker raised its earnings forecasts by 3-24 percent for 2026-28 and projects revenue and net profit CAGRs of 18 percent and 29 percent respectively over the period. The company reported first-half 2026 net profit of RMB572 million, up 16.2 percent year over year, with interim dividend maintained at HKD0.2 per share.
Shares traded at HKD11.6 with turnover of 45.3 million shares worth HKD514 million. Short selling accounted for 28.5 percent of volume at HKD38.14 million. The new target implies roughly 8 percent upside from the current price.
The upgrade marks a sharp reversal from UBS's prior Sell stance and reflects a more positive view on the company's long-term growth prospects. The stock opened 1.95 percent higher and peaked at HKD11.69 during the session, its highest level in five months.
The FDA's May 2026 decision to permit flavored e-cigarettes from legitimate enterprises represents a structural shift for the global vaping industry. SMOORE, a leading vaping device manufacturer, stands to benefit as consumers migrate from the illegal market to regulated products. The company's position in the global vaping supply chain, alongside peers such as RLX Technology and British American Tobacco, could see sustained demand growth as regulatory clarity improves. The US market has historically been dominated by illegal disposable vapes, and the FDA's move could redirect significant volume to licensed manufacturers.
The earnings revision range of 3-24 percent across 2026-28 suggests the broker sees accelerating benefits from the policy change over time. The company's first-half results already showed momentum, with net profit rising 16.2 percent year over year to RMB572 million, supported by stable dividend payouts. The maintained interim dividend of HKD0.2 per share signals management confidence in cash flow generation despite the regulatory transition.
Investors will watch for further analyst actions on the stock and any additional regulatory developments from the FDA that could affect the legal flavored e-cigarette market. The upgrade also raises questions about whether other brokers will follow UBS in reassessing SMOORE's valuation, given the potential for market share gains in the US flavored e-cigarette segment. With the stock trading at roughly 8 percent below the new target, the market appears to be pricing in partial but not full credit for the FDA policy shift.
This article is for informational purposes only and does not constitute investment advice.
