Analysts have weighed in on Royal Mail Group’s (LON:RMG) pay and pension deal with the Communication Workers Union (CWU), noting that the company could return to the FTSE 100 after the postal operator left the blue-chip index last year. The comments came as the mid-cap company announced details of its agreement with the CWU yesterday, disclosing that the ongoing annual cash cost of pensions will continue to be around £400 million.
Royal Mail’s share price has extended the previous session’s gains, fuelled by the pension deal, and as of 13:17 GMT stood at 499.20p, up 0.58 percent. The shares are outperforming the mid-cap FTSE 250 index which has fallen into negative territory and currently stands 0.58 percent lower at 20,068.69 points.
Analysts weigh in on pension deal
City A.M. quoted Cantor Fitzgerald analyst Rob Byde as commenting that while Royal Mail’s pay deal was more favourable and the hours deal was less favourable, changes “will come with significant productivity gains”. The analyst added that with the postal operator powering past a £5-billion stock market valuation, the firm was in the running for a return to the FTSE 100.
The newswire also quoted ETX Capital senior market analyst Neil Wilson as adding that while it was already looking like the privatised company might re-enter the blue-chip index, having gained about 25 percent since November, “this jump takes it back to September 2016 levels so should make the grade”.
Analysts on Royal Mail
The 15 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 450.00p on the shares, with a high estimate of 600.00p and a low estimate of 300.00p. As of January 27, the consensus forecast amongst 17 polled investment analysts the blue-chip group advises investors to hold their position in the company.