Royal Mail sent positive vibes from RBC Capital
Date
5/23/2016 6:48:36 AM
(MENAFN- ProactiveInvestors - UK) Giles Gwinnett, Follow !function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(!d.getElementById(id)){js=d.createElement(s);js.id=id;js.src="//platform.twitter.com/widgets.js";fjs.parentNode.insertBefore(js,fjs);}}(document,"script","twitter-wjs"); 11:05
RBC Capital Markets sends post and parcel group Royal Mail PLC (LON:RMG) a positive vibe, upgrading the share to 'sector perform' from 'underperform' previously.
The outlook is unpredictable, concedes the broker, but adds that this summer/autumn should see greater certainty emerge of the direction of future wage inflation, cash pension costs, and more detail start to emerge from Ofcom.
"With stability on these, we think RMG will be free to increase focus on efficiency efforts like OneWave (that might improve the logistics, sorting and delivery processes), said analyst Damian Brewer.
The 500-year-old company was privatised in 2013 and listed in London to a much- acclaimed float. It is now the subject of a review by regulator Ofcom
Last week it unveiled a drop of full-year pre-tax profits to 267mln versus 400mln a year earlier, attributing the drop to one-off items, such as pension charges.
Fashion house Burberry PLC (LON:BRBY) last week announced a long awaited efficiency programme alongside lower annual profits, sales and revenue but said it was returning 150mln to investors in a share buyback, in the first such buy-back since 2007.
Deutsche today repeats a 'hold' on the stock but cuts the price target to 1,250p from 1,350p (current price: 1,084p).
"We assume that the focus on retail disciplines can boost sales densities cumulatively by 13% over the three year period and we assume the company delivers 100m of annual cost savings by Mar-19.
"Nevertheless this is not enough to re-set its cost-to-sales ratio or to give us increased conviction in long term margins," said analyst Warwick Okines.
In small caps, gold producer Shanta Gold Ltd (LON:SHG) gets a 'repeated' buy from City broker Peel Hunt, which moves the price target to 8p from 9p previously.
Meanwhile, utility giant SSE plc (LON:SSE) gets the attention of Investec but it's not positive.
The broker moves the shares to 'hold' from 'buy' after the UK's second largest energy provider reported a 19% drop in pre-tax profits last year as operations were hit by lower wholesale gas prices, increased competition and falling customers.
The unadjusted pre-tax profit for the year to March 31 was 593mln compared to 735mln in the previous year.
Nevertheless, adjusted earnings per share, which does not include exceptional items, was down 3.7% to 119.5p but still ahead of the utility's target of at least 115p and better than analysts' expectations.
Hotel giant Intercontinental Hotels Group PLC (LON:IHG) has its target price downgraded by heavyweight JP Morgan Cazenove to 2, 865p from 3,438p and a repeated 'underperform' stance on the shares bestowed.
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