Shares in Royal Mail Group (LON:RMG) have fallen into the red in today’s session as Citywire trimmed its stance on the privatised postal operator, arguing that the near-term risks for the blue-chip group outweigh the opportunities, Proactive Investors reports. The comments mark another blow for the FTSE 100 company which warned on profits earlier in the week.
As of 09:25 BST, Royal Mail’s share price had lost 1.78 percent to 348.00p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.66 percent lower at 7,369.18 points.
Citigroup trims stance on Royal Mail
Citigroup lowered its rating on Royal Mail from ‘neutral’ to ‘sell’ today, with a price target of 300p on the shares. Proactive Investors quoted the analysts as commenting that the outlook for the privatised postal operator remained “challenging even after the recent reset”.
“While the recent profit warning saw the share price slide by c. 25 percent, we think this has only served to highlight ongoing risks which the company faces in the near-term,” the broker elaborated, adding that despite the reset in the shares, Royal Mail remained more expensive than some European Postal peers.
“As such we think the near-term risks for Royal Mail outweigh the opportunities,” Citigroup concluded.
Analyst ratings update
As of October 4, the consensus forecast amongst 17 polled investment analysts covering Royal Mail for the Financial Times has it that the company will underperform the market. This has been the consensus forecast since the sentiment of investment analysts deteriorated from ‘hold’ on October 3. According to MarketBeat, the privatised postal operator currently has a consensus ‘hold’ rating and an average price target of 443.58p.