Shares in Royal Mail Group (LON:RMG) have advanced in today’s session as RBC Capital Markets lifted its rating on the shares. Proactive Investors quoted the analysts as saying that the postal operator’s shares had now rebased to a more appropriate level.
As of 13:41 BST, Royal Mail’s share price had added 1.12 percent to 497.53p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.61 percent higher at 7,555.85 points. The group’s shares have added just under 15 percent to their value over the past year, as compared with about a 1.5-percent gain in the Footsie.
RBC lifts Royal Mail’s rating
RBC lifted its rating on Royal Mail from ‘underperform’ to ‘sector perform’ today, leaving its price target on the shares unchanged at 500p, following the group’s shares collapse from 631p seven weeks ago.
“Low growth, yield operational outlook not changed to us – but share price has, so risk/reward changes,” the broker pointed out, as quoted by Proactive Investors, adding that it thought the correction had “occurred as the bulls’ growth story with special dividends (we found) was not delivered”.
While the analysts forecast a slight increase in the total payout in the current financial year to 25p from 24p in fiscal 2018, they see little probable scope for a meaningful dividend hike or surprise return of capital to shareholders.
Other analysts on postal operator
The 16 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 512.50p on the shares, with a high estimate of 630.00p and a low estimate of 400.00p. As of June 22, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group has it that the company will underperform the market.