Royal Mail Group PLC shares can go much higher says JP Morgan after latest upgrade

JP Morgan has raised its price target on Royal Mail Group PLC () to 704p but said the shares have the potential to go even higher.

The postal service said yesterday it expects revenues to be some £900mln higher than expected in the year to end-March due to the surge in parcel volumes sparked by the switch to shopping online during the pandemic.

Royal Mail’s share price has tripled over the past twelve months on the back of this bumper trading but JP Morgan says it is not changing its bullish stance.

“We are not deterred by the strong recent share price move, given the very depressed starting point and step-change in company prospects,” said the broker.

“Peer commentary suggests that the move to e-commerce is permanent, and we expect the share price to react strongly, as this becomes apparent.”

The broker has upped its earnings forecasts for this year by 25% with a 6.5% dividend yield pencilled in for 2022.

‘Overweight’ remains the JPM investment view.  

Shares rose 1% to 495p today.