Royal Mail PLC has a new member of the fan club after one of the fence-sitter turns positive

After weekend reports the Christmas post could be hit by mass delays caused by Covid illnesses, Royal Mail PLC (LSE:RMG) shares defied the odds to open firmly in the green.

The short-term chaos notwithstanding, the shares appear to offer value at current levels.

That’s according to the latest member of the Royal Mail fan club, with Berenberg upgrading its recommendation to ‘buy’ from ‘hold’ and its price target to 650p from 530p.

“After several violent swings over the past few years, many investors understandably view Royal Mail shares with trepidation,” the German bank said in a note to clients.

“With the stock trading on extremely low multiples and headwinds very well flagged, we think the risk/reward now appears more attractive on a 12-24 month view than we have ever seen it for the company.”

In fact, Berenberg says the shares look ‘excessively cheap’ on an enterprise multiple of just five times.

Up 44% in the year to date, but off 23% from its mid-year high, they were changing hands for 491p, up 1.3% in afternoon trade.

Of the 15 banks and brokers logged as following Royal Mail, 12 are positive on the stock. The consensus price target is 659p, which is a 39% premium to the current share price.