FTSE 100 movers: Royal Mail boosted by upgrade; Inmarsat slumps

London’s FTSE 100 index was down 0.2% to 6,145.76 in afternoon trading.

Royal Mail was the standout gainer after RBC Capital Markets upgraded the stock to ‘sector perform’ from ‘underperform’ and lifted the price target to 525p from 445p.

The postal delivery service last week reported a 33% drop in full year pre-tax profits to £267m as UK revenue fell 1% to £7.6bn. Letter volumes dropped 3% while parcel deliveries rose 3%.

RBC said it sees “modest recovery in the parcel price/mix as the company becomes more volume selective”.

The broker said the summer/autumn season should see greater certainty emerge on the direction of future wage inflation, cash pension costs and more detail from Ofcom on its review of the regulation of the company.

ARM Holdings, which designs chips for Apple, was also in the black following reports the US tech giant has asked its suppliers to deliver up to 78 million of its upcoming updated iPhone models.

Inmarsat was under the cosh after Morgan Stanley downgraded the stock to ‘equalweight’ from ‘overweight’ and slashed the price target to 800p from 1,350p as it cut its earnings forecasts for the stock.

The bank said that despite a 33% drop year-to-date, offsetting a 42% jump in 2015, revenue guidance is too ambitious and there is scope for earnings downgrades.

It pointed out that management has already cut 2016 revenue guidance by 4%, but kept 2018 targets, and MS expects these to be the next to fall away. It reduced its 2017-2018 earnings per share forecasts by 18-22%.

Risers

Royal Mail (RMG) 510.00p 3.68%
ARM Holdings (ARM) 966.50p 2.33%
3i Group (III) 516.00p 2.08%
DCC (DCC) 6,590.00p 1.62%
Royal Bank of Scotland Group (RBS) 234.90p 1.34%
Travis Perkins (TPK) 1,884.00p 1.29%
International Consolidated Airlines Group SA (CDI) (IAG) 523.00p 1.26%
Berkeley Group Holdings (The) (BKG) 3,243.00p 1.25%
easyJet (EZJ) 1,486.00p 1.09%
Smith & Nephew (SN.) 1,163.00p 1.04%

Fallers

Inmarsat (ISAT) 726.50p -3.77%
Anglo American (AAL) 582.00p -3.05%
BHP Billiton (BLT) 800.30p -2.15%
Tesco (TSCO) 161.10p -1.95%
Rio Tinto (RIO) 1,921.50p -1.59%
Glencore (GLEN) 126.70p -1.52%
Old Mutual (OML) 167.50p -1.30%
Aviva (AV.) 431.10p -1.26%
Rolls-Royce Holdings (RR.) 635.00p -1.24%
Royal Dutch Shell 'B' (RDSB) 1,668.00p -1.24%