JP Morgan says share price drop in RPC Group unwarranted

JP Morgan said investors risked overlooking the merits of RPC Group's 'equity story' amid the din of the negative share price reaction to the company's fiscal year 2017 results.

RPC has an established trackrecord of extracting "meaningful and sustainable" cost synergies as it consolidates a fragmented packaging market, the investment bank explained.

"This is a strategy that we believe will continue to generate shareholder value in the years ahead."

Changing hands on a price-to-earnings multiple of 10, that opportunity was not being captured in the share price.

The share price drop which ensued after its full-year numbers was neither reflective of the company's performance last year nor its future prospects, it added.

Nonetheless, JP Morgan said it did "appreciate" the concerns of some in the markets regarding the company's significant exceptional costs and the presentation of its free cash flow.

The investment bank reiterated its 'overweight' recommendation and 1,250p target price.