Royal Mail owner soars 11% as Bank of America upgrades stock

Shares in International Distribution Services (LSE: IDS), parent of Royal Mail, soared 11.6% Tuesday after an upgrade from Bank of America.

In a note to clients, BofA said Royal Mail’s turnaround is progressing steadily following the recent labour deal. The broker expects the agreement with the Communication Workers Union to benefit profits from Q4 2023 as inflationary pressures ease. BofA also sees an upside to consensus earnings estimates and raised its 2025 adjusted EBIT forecast for Royal Mail, putting it 19% above consensus.

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BofA moved its price target to 335 pence per share from 275 pence previously. “We are encouraged by turnaround progress at Royal Mail and how the new CEO is putting his stamp on operations,” the bank stated.

IDS shares have rallied 24% year-to-date and 28% over the past 12 months.