Royal Mail share price: JPMorgan Cazenove remains ‘cautious’ on stock

Analysts slash price target following postal operator’s interims

Royal Mail share price: JPMorgan Cazenove remains ‘cautious’ on stock

JPMorgan Cazenove has become the latest broker to weigh in on Royal Mail Group (LON:RMG) following the company’s interims last week when the privatised postal operator reiterated its revised guidance. The analysts note that they will remain ‘cautious’ on the stock until they have ‘more comfort’ over decreases in future letter volumes and the amount of possible cost avoidance, Proactive Investors reports.

Royal Mail’s share price fell in the previous session, giving up 2.31 percent to 308.70p. The stock underperformed the broader UK market, with the benchmark FTSE 100 index shedding 12.99 points to close 0.19 percent lower at 7,000.89. The shares have resumed their slide in early morning trade, having given up 1.19 percent to 305.04p as of 08:03 GMT, as compared with a 0.42-percent drop in the Footsie.

JPMorgan ‘cautious’ on group

JPMorgan Chase & Co lowered its price target on Royal Mail from 341p to 285p yesterday, Proactive Investors reports. The broker explained that it would ‘remain cautious’ on the stock until it had ‘more comfort’ over decreases in future letter volumes and the amount of possible cost avoidance.

The broker, further reiterated its ‘underweight’ rating on the shares, given the uncertain look going forward.

The comments come after Credit Suisse lowered its price target on the privatised postal operator last week, arguing that it did not believe that the company’s dividend would be covered by free cash flow in the 2020 financial year.

Analyst ratings update

According to MarketBeat, Royal Mail currently has a consensus ‘hold’ rating and an average price target of 375.21p, while the consensus forecast amongst 18 polled investment analysts covering the postal operator for the Financial Times has it that the company will underperform the market.

As of 07:59 GMT, Tuesday, 20 November, Royal Mail share price is 308.70p.

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