Royal Mail owner International Distributions Services PLC (LSE:IDS) has received a minor downgrade to earnings from UBS, which says the investment case for the company remains finely balanced.
Announcements in recent weeks have been a seesaw says the broker, with some positive and some not so.
Plusses have been “A more aggressive price increases in the UK letters/parcels business vs history, a market share recovery program well on track and progress in terms of meaningful potential mid-term USO cost reductions”.
On the downside, there has been a sequential deterioration in UK online sales in January/February while UBS has become more cautious on prospects for overseas parcels arm GLS and ongoing capex investment.
The upshot is a 5% reduction in UBS’ underlying profits forecast for 2025 and 2026 by around 5% offset by a higher EBIT margin in the UK division mid-term.
Reflecting that 'neutral' is the investment view with a 290p price target.