Liberum remains bearish on Royal Mail Group (LON:RMG), arguing that a bigger push is needed to stop the postal operator from missing its target, Citywire reports. The comments came after the FTSE 100 company updated investors on its performance yesterday, revealing a fall in full-year profits.
Royal Mail’s share price fell deep into the red following the results, shedding 7.16 percent to close at 555.00p. The shares, however, remain more than 28 percent up over the past year.
Liberum remains bearish
Liberum reiterated its ‘sell’ stance on Royal Mail yesterday, with a price target of 450p on the shares. The move came after the privatised postal operator updated investors on its full-year performance, revealing that its operating profit before transformation costs had fallen to £236 million in the financial year ended March 25, from £490 million in the prior-year period, and cautioned that addressed letter volume declines were expected to come in at the higher end of its guided range for the 2018-19 year due to the introduction of General Data Protection Regulation (GDPR).
“A mixed outlook has uncertain implications for consensus estimates,” the broker’s analyst Gerald Khoo commented, as quoted by Citywire. “Management expects parcels volume and revenue growth to at least match the previous year, but there is clear caution on letters, where the volume decline is seen at the worse end of the long-term range, with downside risk if business uncertainty persists.”
‘More is needed’
The analyst further pointed out that although Royal Mail’s management was “aiming at the upper end of its productivity improvement range” after missing last year “we believe more is needed”.
According to MarketBeat, the privatised postal operator currently has a consensus ‘hold’ rating and an average price target of 466.25p.