Deutsche Bank has turned bearish on Royal Mail Group (LON:RMG), arguing that shareholders are not the priority in 2018, WebFG News reports. The comments mark another hit for the privatised postal operator after UBS recently trimmed its valuation on the stock, pointing to low visibility in the near term.
Royal Mail’s share price has advanced in London in today’s session, having added 0.89 percent to 428.40p. The stock is outperforming the mid-cap FTSE 250 index which currently stands 0.42 percent higher at 19,938.62 points. The group’s shares have lost more than eight percent of their value this year.
Deutsche Bank lowers stance
Deutsche Bank lowered its recommendation on Royal Mail from ‘hold’ to ‘sell’ on Friday, trimming its price target on the shares from 450p to 359p. The analysts explained that the transformation of the privatised postal operator was ‘still in the early phases’.
As such, “shareholders are not at the top of the stakeholder list,” with management’s primary focus staying on restructuring, employee wages and pensions and M&A, the broker pointed out, as quoted by WebFG News.
While chief executive Moya Greene and her team are doing a ‘fine job,’ the operating environment is expected to become ‘even more challenging’ in the coming year, making it more difficult for Royal Mail to modernise and take costs out of the business, against a backdrop of weak GDP growth, Brexit, wage bill pressures and an ongoing mediation process with unions over pay and pensions.
Other analysts on Royal Mail
Jefferies, which has an ‘underperform’ rating on the postal operator, lowered its price target on the stock from 330p to 300p on Friday, while Berenberg Bank, which sees the company as a ‘hold,’ lifted its valuation from 375p to 415p. According to MarketBeat, Royal Mail currently has a consensus ‘hold’ rating and an average price target of 428.62p on the shares.