JPMorgan cuts Royal Mail target price after Q1 results
JPMorgan Cazenove cut its price target on neutral-rated Royal Mail to 537p from 561p on Wednesday following the company's first-quarter results a day earlier.
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It said the results suggest a relatively stable backdrop, with any GDPR-related impact appearing modest year-to-date, such that letter revenue is down a manageable 5% year-on-year, excluding elections.
That said, the bank remains cautious and reckons letter trends could still deteriorate from here.
JPM said addressed letter volume was down 6%, which is at the upper end of the 4- 6% range, as expected. Parcels appears to be a bright spot, it said, with volume and revenue up 7% and 6% respectively, though noted that around 1% of this revenue growth is international volume, which will likely have a lower drop-through to profitability.
"We would also note that GDPR has only been in effect for circa 1/3 of the period covered by the Q1 trading update, such that any impact may be more pronounced in future periods," it added.
Royal Mail shares closed down 4.5% at 467.50p.