CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Royal Mail share price: what’s the latest after strike action threatens profits?

The British postal service saw its share price tumble 16% last week after warning investors that its profits will come under pressure from strike action in the run up to Christmas.

Royal Mail Source: Bloomberg

Royal Mail warned investors last week that strike action over the Christmas period could see its UK unit report a loss next year, with it forced to delay its turnaround plans aimed at addressing falling revenues driven by declining letter volumes.

‘Industrial action, or the threat of it, can only hurt our company, and our colleagues,’ Royal Mail CEO Rico Back said. ‘That is because, in today’s postal market, our customers have choices.’

‘Consumers can send a text or email when they would once have written a letter; and shippers can choose from a wide range of delivery companies, not just Royal Mail.’

The warning, which was delivered in its half-year results, prompted its share price to fall 16% to 191p. However, the stock has recovered some of its losses, with the stock closing at 207p on Tuesday.

Looking to trade Royal Mail? Open a live or demo account with IG.

Goldman Sachs upbeat about Royal Mail’s share price

Goldman Sachs is the only bank to maintain a ‘buy’ rating for the stock in November, issuing a target price of 300p for Royal Mail.

Based on Royal Mail closing at 191p on Tuesday, analysts at Goldman Sachs believe the stock has a potential upside of 57%

JP Morgan is less optimistic about the postal service’s price trajectory, with it reiterating its ‘underweight’ rating in November and issuing a 159p target price for the stock, representing a potential downside of -16%.

Liberum Capital and Deutsche Bank both reiterated a ‘sell’ rating for the stock, with Barclays Capital issuing an ‘overweight’ rating.

You can go long or short Royal Mail with IG using derivatives like CFDs.

Royal Mail under pressure from declining letter volumes

Despite Royal Mail recording its strongest UK letter revenue performance for five years in its first six months of trading, the postal service admits that its letter business remains under considerable pressure.

‘Lower than anticipated GDP and lower GDP forecasts for 2020-21, together with business uncertainty, are expected to have an impact on addressed letter volumes,’ Back added.

For 2019-20, Royal Mail expects addressed letter volume decline (excluding elections) to be in the 7% - 9% range, with volumes forecast to fall between 6% - 8% the following year.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.