BAT SHARES UNDERVALUED, SAY STOCK MARKET ANALYSTS BAT Industries Plc <BTI.L> 1986 results, which were at the upper end of market expectations, showed the company was in a strong position and that its shares were probably undervalued, share analysts said. BAT shares were down at 524p in late afternoon trading after a previous 535p close. They touched a high of 538p earlier on news of a 19 pct rise in annual profits to 1.39 billion pre-tax. Stock market analysts said today's generally weak stock market plus unwinding of positions after heavy buying of BAT shares in the run-up to the results caused the fall in the share price. "In the current market, people almost expect companies to beat expectations," said one analyst, adding that pretax profits of 1.35 to 1.40 billion stg had been forecast. BAT's 1986 figure of 1.39 billion stg compared with a 1985 pretax profit of 1.17 billion. Brokers noted that BAT's shift away from its underperforming industries and the decreasing share of the tobacco portion of the group were seen as good signs. BAT Chairman Patrick Sheehy told a news conference that the tobacco sector of the company had declined to 50 pct from 74 pct four years ago. Sheehy said he could see the tobacco portion of the company declining further as other sectors increased in importance. He said BAT was looking to expand in the area of financial services, in particular in the U.S. Sheehy also said the group had "no sizeable acquisitions" in sight in the near future. Analysts said BAT's increasingly good performance in the U.K. Insurance area was encouraging. Its declining debt-to-equity ratio of currently about 16 pct also made it likely that BAT would soon be looking to make major acquisitions, they said.