Royal Mail Group PLC (LON:RMG) shares moved higher again on Friday as JPMorgan upgraded its rating for the postal delivery firm to ‘neutral’ from ‘underperform’ after a recent update.
In a note to clients, the US investment bank’s analysts said: “While the UK turnaround is far from certain, stronger short-run trading has at least bought some time, and should prevent a build-up of net debt. The CWU negotiation appear to be the main ongoing concern.”
The analysts said they have raised their forecasts for Royal Mail materially and boosted their target price for the stock to 253p from 145p.
In late morning trade on Friday, Royal Mail shares were 6.4% higher at 234.60p.
On Tuesday, the FTSE 250-listed firm said it still expects to make a “material loss” this year though revenues are on track to be better than expected thanks to higher parcel volumes because of the coronavirus pandemic lockdown.
The postal services group reported parcel volumes up 34% in the first five months of the year but letter volumes were down 28%, with 1.1bn fewer letters sent since the start of April this year compared to last.
Group revenue for the five-months to August 30, 2020, is up £139mln compared to last year, with parcels revenue up 33.1% but letters down 21.5%, though that was not as bad as was reported earlier in the year