Goldman Sachs is out with its near-term forex outlook
Investing.com -- Morgan Stanley (NYSE:MS) has downgraded Poste Italiane SpA (BIT:PST) (PST.MI) to “equal weight” from “overweight,” while raising its price target to €20 from €15.20, in a note dated Tuesday.
The downgrade reflects limited near-term upside despite solid fundamentals and improved financial performance.
Analysts said Poste continues to benefit from structural tailwinds in Italian e-commerce and insurance markets.
These trends support growth in its Parcel, Payments and Insurance segments. Margin expansion is expected to continue, driven by cost control, especially in labor and parcel delivery.
Morgan Stanley projects mid-single-digit annual adjusted EBIT growth through 2028, which it said is broadly aligned with market expectations.
The brokerage noted that while free cash flow is improving, with a 10% yield, and the net financial position has strengthened to -€3.6 billion, meaningful capital deployment is unlikely before 2027.
Poste’s insurance division is now remitting more than 100% of its profits to the holding company, boosting liquidity.
The net financial position is expected to improve further to -€0.6 billion by 2028. However, Morgan Stanley expects management to prioritize rebuilding financial flexibility over pursuing acquisitions or expanded capital returns in the near term.
Valuation is another factor behind the downgrade. Poste shares have risen since its 2025 strategic update and the acquisition of a Telecom Italia (BIT:TLIT) stake.
The stock now trades at 11 times earnings, above its historical average. While the valuation reflects strong execution and a healthier balance sheet, analysts believe most short-term gains are already priced in, with limited catalysts ahead.
Morgan Stanley said the company’s diversified business model and structural strengths remain intact, but current valuation leaves little room for further appreciation without new developments.
Upside risks could come from earlier-than-expected capital deployment or greater-than-forecast synergies from the Telecom Italia investment. Potential downside risks include widening BTP spreads or a slowdown in ecommerce penetration.