Royal Mail parent IDS surges on BofA Merrill Lynch upgrade

Royal Mail parent International Distribution Services surged on Tuesday after Bank of America Merrill Lynch upgraded the shares to ‘buy’ from ‘neutral’.

The bank said a recovery at Royal Mail is progressing steadily after the recent deal with the Communication Workers Union and that the company is winning back volume share.

BofA said the union deal should benefit the profit and loss account meaningfully from the fourth quarter of next year. In addition, the cost base should see less pressure as inflation eases.

At 1555 GMT, the shares were up 11.2% at 269.40p.