viewRoyal Mail PLC

Royal Mail shares offer 'most robust upside potential', says JPMorgan

JP Morgan maintained its ‘overweight’ rating but cut its target price to 500p from 535p

Royal Mail
Royal Mail has made progress in its talks with the union over pay and pensions

Royal Mail PLC (LON:RMG) shares appear to offer the most robust upside potential among transport stocks, according to JPMorgan Cazenove.

JP Morgan maintained its ‘overweight’ rating but cut its target price to 500p from 535p.

READ: Royal Mail heads higher as threat of Christmas strike action fades

The financial services firm said the post office giant’s valuation “continues to discount a sizeable related cash flow headwind” amid ongoing uncertainty related to wages and pensions.

Royal Mail and the Communications Workers Union (CWU) have been in talks to end a long-running dispute over pensions, pay and jobs.

In the company’s first half results in November, it warned that it faces increased cost pressures in the second half from the potential impact of industrial action over pay and pensions. 

However, last week the group revealed it had made progress in its talks with the CWU.

The company released details of a report by Professor Lynette Harris, who mediated talks between Royal Mail and the Communication Workers Union (CWU). It said the mediation process had been "helpful in bringing Royal Mail and the CWU together to advance the discussions".

“Recent progress toward resolution bodes well along with the accelerating parcel growth, solid GPS profit reflected in first half results,” JPMorgan said.

“Ahead of 2018, RMG shares appear to offer the most robust upside potential followed by still meaningful circa 10% upside from the likes of DSV and ‘core’ postal yields plays, BPOST and PNL.”

Shares in Royal Mail rose 0.36% to 443.80p in morning trading.

Quick facts: Royal Mail PLC

Price: 306.3 GBX

Market: LSE
Market Cap: £3.06 billion

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...


Power Metal Resources' diversification is 'an attractive proposition'

Mining Capital's Alastair Ford talks to Proactive London about Power Metal Resources (LON:POW). He believes the miner's diversification and global reach is a huge advantage and makes it "an attractive proposition". Ford says the CEO Paul Johnson is simply now keeping hold of all...

14 hours, 28 minutes ago

2 min read