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UK Mail downgraded by Investec

18 November 2015 13:21

Investec has moderated its recommendation on UK Mail (LON:UKM) and moved to an add rating (from buy) following the parcel and letter delivery group's first-half results, despite highlighting that these came in ahead of its forecasts.

Specifically, the broker said: "H1 results are c.30% ahead of our forecasts. However, the recovery in Parcels margin will take longer than expected with arrivals scheduling now problematic and Mail margins are lower than anticipated due to competitive bidding to win volume."

Analysts have cut their target price to 380 pence a share (from 485 pence) to reflect the ongoing headwinds and highlighted that at this level the stock implies a total return of 9.2 per cent.

Meanwhile, Cantor Fitzgerald stuck with hold call and 450 pence target.

"The transition to the new hub continues be difficult with higher costs incurred," analyst Robin Byde commented.

"We think that this will put second half and FY17 consensus forecasts under pressure. UKM continues to trade at a significant premium to the sector."

At 1:21pm: (LON:UKM) UK Mail Group PLC share price was -38p at 326p

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