Goldman Sachs raises Royal Mail price target, keeps at 'buy'
Goldman Sachs boosted its target price for Royal Mail to 610p from 585p, saying it expects to seen an improvement in underlying profitability.
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Analysts at Goldman reiterated their ‘buy’ rating on the stock.
The said that while the postal service’s share price had been volatile due to regulatory uncertainty and competition in parcels, better-than-expected cost control has been a “positive surprise”.
“Ongoing improvement in the company’s efficiency levels, a return to growth in parcel revenues, which we forecast only from 2016/17 onwards, and the successful execution of real estate disposals will be the key drivers of share price performance, in our view.”
Goldman Sachs said free cash flow remained strong and that Royal Mail had the ability to unlock value from disposals of its London real estate assets.
Shares in Royal Mail were up 0.59% to 508p at 09:56 on Monday.