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Liberum argues that the recent strength in Royal Mail Group’s (LON:RMG) share price is at odds with threats from its workforce dispute, Citywire reports. The comments came as the analysts turned bearish on the privatised postal operator.
Royal Mail’s share price tumbled in the previous session, giving up 3.77 percent to close at 211.70p, underperforming the FTSE 250 which ended trading 0.62 percent in the red at 19,919.07 points. The postal operator’s shares have given up more than 56 percent of their value over the past year, as compared with about a 2.7-percent fall in the mid-cap index.
Liberum turns bearish on Royal Mail
Liberum trimmed its stance on Royal Mail from ‘hold’ to ‘sell’ yesterday, with a price target of 185p on the stock. Citywire quoted the broker’s analyst Gerald Khoo as commenting that the postal operator’s “ongoing dispute with its workforce poses significant problems, even if industrial action going into the peak season can be avoided”.
“The recent share price strength is at odds with the deteriorating industrial relations picture and weakening macro outlook, and the valuation wholly unreflective of the structural challenges faces by the group,” he pointed out.
The comments come after the privatised postal operator recently admitted breaking competition law, alongside a reseller of its parcel delivery services, by means of an anti-competitive agreement.
Other analysts on FTSE 250 company
The 14 analysts offering 12-month targets on the Royal Mail share price for the Financial Times have a median target of 240.00p, with a high estimate of 325.00p and a low estimate of 150.00p. As of September 24, the consensus forecast amongst 17 polled investment analysts covering the privatised postal operator advises investors to hold their position in the company.
Royal Mail is scheduled to update the market on its half-year performance on November 21.
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