Royal Mail shares slump as Barclays slashes target price

Shares in Royal Mail slumped this morning after bankers at Barclays snipped the firm’s target price in a note to investors, predicting choppy waters ahead for the postal group.

Barclays cut the target price from 640p to 400p and sent shares plunging over 4 per cent, putting the group among the biggest stragglers on London’s benchmark FTSE 100 index today.

Analysts at Barclays predicted that 2023 would be a “challenging transition year” for the group.

Royal Mail has been battling with soaring costs across it supply chain in recent months and was forced to hike the cost of stamps to 95p this month to offset inflation.

“We need to carefully balance our pricing against declining letter volumes and increasing costs of delivering to a growing number of addresses six days a week,” said Nick Landon, the chief commercial officer at Royal Mail.

Landon said the price hikes were necessary to maintain the ‘one-price-goes-anywhere’ service for future generations.

Letter volumes have fallen by more than 60 per cent since their peak in 2004 plunged 20 per cent further since the start of the pandemic.

But profits have quadruple to £726m as parcel volumes surged during the pandemic.