Royal Mail share price: Barclays keeps ‘overweight’ stance on group

Analysts argue recent agreement with union removes toxic element from stock

Royal Mail share price: Barclays keeps ‘overweight’ stance on group

Barclays has reiterated its ‘overweight’ rating on Royal Mail Group (LON:RMG), arguing that the company’s recent agreement with the Communication Workers Union (CWU) has removed a toxic element from the stock, Proactive Investors reports. The comments came after the privatised postal operator recently reclaimed its spot in the benchmark FTSE 100 index, with the agreement fuelling demand for the company’s shares.

Royal Mail’s share price has jumped in London in today’s session, having added 2.72 percent to 566.62p as of 14:10 GMT, outperforming the mid-cap FTSE 250 index, which currently stands 0.14 percent higher at 19,717.63 points. The group’s shares have added a little over 40 percent to their value over the past year.

Barclays ‘overweight’ on group

Barclays reiterated its ‘overweight’ stance on Royal Mail today, while hiking its forecasts following the group’s recent agreement with the CWU and the company’s latest trading update.

“We regard the recent broad set of agreements between the two parties as a landmark,” the analysts pointed out, as quoted by Proactive Investors. “To have closed, with a small surplus, one of the larger defined benefit pension schemes in the UK; to have replaced it with an affordable defined contribution scheme […] and to have agreed on a pay deal to April 2020, without industrial action, is a remarkable and forward-thinking effort by all involved, in our view.”

Barclays, however, has cautioned that it will still be necessary to see how the move to a shorter working week and the associated changes in working practices will develop, while noting that in its view, there is now a strong platform.

Other analysts on Royal Mail

The 16 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 475.00p, with a high estimate of 600.00p and a low estimate of 300.00p. As of March 3, the consensus forecast amongst 18 polled investment analysts covering the blue-chip group advises investors to hold their position in the company. 

As of 14:50 GMT, Wednesday, 07 March, Royal Mail share price is 565.00p.

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