Royal Mail share price extends losses after profit warning

Postal operator faces FTSE 100 relegation

Royal Mail share price extends losses after profit warning

Shares in Royal Mail (LON:RMG) posted another hefty loss in the previous session, putting the company on course for a potential relegation from the benchmark FTSE 100 index. The fall came after the privatised postal operator warned on profits earlier in the week, saying that its UK productivity and cost performance had been ‘disappointing’.

Royal Mail’s share price closed 8.38 percent in the red at 358.60p yesterday, following a near 18-percent slump in the previous session. The group’s shares have again resumed their fall this morning, having given up 3.10 percent to 347.50p as of 08:07 BST.

Royal Mail faces FTSE 100 relegation

Citywire quoted Hargreaves Lansdown analyst Laith Khalaf as commenting yesterday that the heavy fall in Royal Mail’s share price had made it  “a prime candidate for relegation from the FTSE 100 next time a reshuffle takes place in December”.      

“Good news is thin on the ground, but for what it’s worth, the dividend policy is maintained, and the parcel business is still experiencing growth in volumes and revenues,” he pointed out, adding that the group was “emerging from a difficult period of industrial negotiation and relations with the unions are no doubt strained”.

He, however, reckons that while it looked like resolutions to those problems have not yet delivered the desired results, “we’ll need to wait until the half-year statement for a fuller picture”.

Analyst ratings update

The 17 analysts offering 12-month price targets for Royal Mail for the Financial Times have a median target of 490.00p on the shares, with a high estimate of 630.00p and a low estimate of 300.00p. As of October 2, the consensus forecast amongst 17 polled investment analysts covering the privatised postal operator advises investors to hold their position in the company.  

As of 08:02 BST, Wednesday, 03 October, Royal Mail share price is 347.65p.

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