Edinburgh-based Menzies told shareholders that trading for the half year to July 1 was in line with expectations. The company also expects the full year to match forecasts.
In response, KBC Peel Hunt raised its recommendation on the group to 'buy' from 'hold' and said its sum of the parts analysis "conservatively" pointed to a price of over 600 pence.
In a note to clients, the broker said trading at Menzies Distribution is weak, as anticipated, while activity at Menzies Aviation is strong.
Recent acquisitions in both divisions were performing well and the group was addressing the industry changes at Menzies Distribution by overhauling its cost base in preparation for a more competitive market place, it added.
Menzies is also likely to continue to make acquisitions in both divisions and the integration of US cargo handler Aeroground, which the company bought in May, is going well. The group expects it to be earnings enhancing this year.
The broker also argued that yesterday's WH Smiths demerger announcement was likely to highlight the under-valuation of Menzies Distribution.
At the same time, Altium Securities reiterated its 'hold' advice but lowered its price target to 475p from 540 pence to reflect the market retreat. ..SUPL: