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Brokers: Royal Mail bag contains mixed views

Royal Mail, Go-Ahead, Boohoo.com, BP, Marks & Spencer...

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Headwinds ahead for the parcels business reckons Numis

Royal Mail PLC (LON:RMG) attracts differing views today. Credit Suisse is more bullish than before and has upgraded its rating to neutral from sell.

Rating is fair and management has a track record of cost cutting. The target price is 490p.

Numis is more bearish, with a sell rating and target of 360p.

Wage talks with the main trade union, the CWU, have begun says the broker and the Union is taking a hard line.

Pay and pension talks, and a regulatory review are ongoing headwinds, but Numis’s view is based on the expectation parcels growth will disappoint in the long term.

Numis is keener of online fashion retailer Boohoo.com (LON:BOO). Annual results were strong despite investing heavily throughout the business. The target price rises to 60p.

Numis downgrades bus and rail group Go-Ahead (LON:GOG) to hold from buy. There are few short-term catalysts for the shares and only modest upside thought the target price rises to target price to 2,860p from 2,750p.

Veteran retail analyst Tony Shiret at Haitong has kept a ‘buy’ rating on Marks & Spencer (LON:MKS) but trimmed the price target by 9% to 500p to reflect the recent de-rating of the sector.

Citgroup does expect a dividend cut as HSBC PLC (LON:HSBA) even though earnings are under pressure, led by a slowdown in HK and lower UK/US base rates for longer. But 2016 capital generation, boosted by the sale of Brazil, should be more than sufficient to maintain the current dividend.

Liberum says hold BP (LON:BP.) with a target of 382p

Replacement cost net income was US$532mln in the latest quarter compared to consensus of a loss of US$215mln but was still 80% down on a year ago.

Overall, the results look better than consensus and solid. The Downstream and Upstream performances improved but both have further to go for positive cash generation. 

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