< The 2014 All-Europe Research Team

Jonathan Leinster & team
UBS
First-place appearances: 7

Total appearances: 25

Team debut: 1986

UBS falls back to second place after a year in first. Working out of London, Jonathan Leinster is a team of one covering European tobacco names, which inched up 1.9 percent last year, lagging the broad market by 16.2 percentage points. “At the beginning of 2013, the industry players were far too optimistic,” Leinster says. Consequently, “results through 2013 disappointed, and the sector has been subject to a derating as investors have been assuming that this rate of volume decline has become the new norm.” His group will bounce back to more moderate valuations, Leinster believes, but will face obstacles in the form of regulations likely to be issued in early 2014. These include a U.K. report on standardized packaging requirements and a possible final version of the European Union’s Tobacco Products Directive governing everything from making through selling the items. The company best positioned to perform well amid the challenges is British American Tobacco, the analyst contends. The world’s second-largest tobacco company, by sales, “remains a long-term winner with a combination of excellent geographic coverage and rapidly improving brand portfolio,” Leinster concludes.