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Royal Mail upgraded to ‘hold’ from ‘sell’ by Berenberg on valuation grounds

Berenberg's analysts noted that survey data indicates growth may slow somewhat in 2019 in the European parcel markets but respondents still are planning for around 6% volume growth this year

Parcel delivery
The German bank trimmed its target price for the FTSE 250-listed firm to 240p from 250p, with the shares currently trading at 243.50p

Berenberg has raised its rating for Royal Mail Group PLC (LON:RMG) to ‘hold’ from ‘sell’ on valuation grounds in a review of the European parcel delivery sector.

The German bank trimmed its target price for the FTSE 250-listed firm to 240p from 250p, with the shares currently trading at 243.50p, up 2.2% on Friday’s close.

READ: Amazon’s recent delivery expansion is bad news for Royal Mail, says UBS

In the note to clients, Berenberg's analysts noted that survey data indicates that growth may slow somewhat in 2019 in the European parcel markets but respondents still are planning for around 6% volume growth this year.

They pointed out that Royal Mail's letter volumes are likely to decline in full-year 2020, while its competitive position is precarious in parcels, but they think the stock is now looking fairly valued.

Elsewhere in the sector, Berenberg’s analysts upgraded their ratings for both Dutch firm PostNL and US group United Parcel Services Inc. (NYSE:UPS) to ‘buy’.

However, they cut their stance on FedEx Corp (NYSE:FDX) to ‘hold’, which has been outperforming, due to the EU market slowdown and indigestion from its acquisition of TNT Express.

Quick facts: Royal Mail PLC

Price: 184.75 GBX

LSE:RMG
Market: LSE
Market Cap: £1.85 billion
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