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The investment bank said they sensed the post carrier will “give a cautious message on the UK in May, particularly on the outlook for costs and parcel volume” as the uptick in delivery demand during the pandemic began to unwind
() has been trading strongly, however, it may be trying to lower investor expectations for its 2022 financial year, according to analysts at JP Morgan, who cut their target price for the post carrier to 685p from 704p in a note on Thursday.
The investment bank, which rates Royal Mail at ‘overweight’, said they sensed the company will “give a cautious message on the UK in May, particularly on the outlook for costs and parcel volume” as the uptick in delivery demand during the pandemic began to unwind.
READ: Royal Mail resumes dividends as eCommerce boom continues
However, analysts said they expected any decline in the strong volumes during coronavirus (COVID-19) to be gradual “rather than as a sharp one year reset”.
Despite this, the bank said they expected the first half of 2022 to be “much stronger” due to the relatively weak comparisons for the first half of its 2021 financial year.
“We remain [overweight], though we do expect that the messaging is likely to be cautious at the [full year] results”, JP Morgan said, adding that for 2022 they are forecasting an operating profit of £834mln compared to consensus estimates of £779mln.
Shares in Royal Mail were down 3.7% at 486p in late-morning trading on Thursday.
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