UBS expects a slowdown in UK parcel volume growth for Royal Mail Group (LON:RMG), Proactive Investors has reported. The comments come as the privatised postal operator prepares to release a trading update on January 18, while investors continue to await details on the group’s negotiations with one of its unions on pay and pensions.
Royal Mail’s share price has jumped in London in today’s session, having added 1.16 percent to 462.50p as of 13:26 GMT. The stock is outperforming the FTSE 250 index which currently stands 0.56 percent higher at 20,853.24 points. The group’s shares have added more than three percent over the past year, as compared with more than a 13-percent gain in the mid-cap index.
UBS flags parcel slowdown
Proactive Investors reports that UBS expects a slowdown in Royal Mail’s UK parcel volume growth in the second half to three percent along with a marginal deterioration in letter volumes to 5.5 percent.
“The primary reason for this is the slowdown in UK retail sales, which is likely to [have an] impact on the level of growth in UK e-commerce, although it will continue to grow,” the analysts pointed out, as quoted by the newswire. “With a large part of the £190mln cost avoidance programme this year achieved in H1, we also assume a slower run-rate for cost reductions in H2.”
Other analysts on Royal Mail
The 15 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 445.00p on the stock, with a high estimate of 590.00p and a low estimate of 300.00p. As of January 6, the consensus forecast amongst 17 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.