Heavyweight broker JP Morgan Cazenove remains moderately bullish on Royal Mail Group PLC (LON:RMG) despite cutting its price target for the parcels delivery outfit.
The rating remains “overweight” despite the price target shifting to 545p from 600p, reflecting a weak showing in the final quarter of 2016 – the group’s third quarter – in terms of mail volumes.
In Cazenove’s view, the stock stand out versus its peers ahead in a market that is discounting what Caz thinks will be a positive conclusion to the long-running pension negotiations.
The shares have been out of favour since a poor third quarter mail volume update, with investors worried about the post-Brexit environment and the prospect of strike action.
Resolution of the pension issue should see sentiment towards the former nationalised company change, Caz argues.
Shares in Royal Mail were 0.8% higher in the lunchtime session at 411.7p, having fallen as low as 406.04p at one point.