Royal Mail shares up 207%: Will drone deliveries maintain the bull run?

The Royal Mail share price is up 4.4% in the last five days as it continues to innovate its way out of the pandemic after-effects. With drone deliveries being trialled in Scilly Isles, analysts remain bullish on Royal Mail shares.

  • Royal Mail share price up 207% in 12 months.
  • Analysts remain bullish with £7.08 price target.
  • Will drone deliveries help keep Royal Mail bull run going?
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Shares in Royal Mail opened at £5.11 on 11 May and quickly climbed to £5.20 during the opening hour of trading. This short-term increase is reflective of a longer-term bull run for the delivery company. Despite staffing issues and operational restrictions caused by Covid-19, Royal Mail shares have more than doubled in value over the last 12 months.

How much have Royal Mail shares increased?

From the midst of the pandemic in May 2020, the Royal Mail share price has increased 207% from 161p to £5.20. This continued upwards momentum is further confirmation that the company’s recent surge in parcel deliveries is driving revenue. As noted in February, Royal Mail delivered 496 million parcels in Q4 2020. This counteracted a 14% decrease in letter deliveries and, according to Keith Williams, the chair of Royal Mail’s board, was enough to help it through ‘challenging circumstances’.

Parcel deliveries remain a growing asset within the Royal Mail group and are keeping it on course to achieve full year profits of more than £500 million. The current dynamics have prompted analysts to maintain their bullish outlook. The consensus rating among analysts is hold. Data collated by the Financial Times shows seven out of 15 analysts believe Royal Mail shares will outperform the market. That’s up from two analysts making this recommendation in May 2020.

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What is the Royal Mail share price target?

The same analysts also have a median Royal Mail share price target of £5.60, with a high of £7.08. At the top end, that would represent an increase of 318% in Royal Mail shares over the last 12-18 months. The decision to double down on parcel deliveries and offer a seven-day service in March has helped the recent rise. However, there may be more changes on the horizon. Royal Mail recently announced the trial of drone deliveries on the Scilly Isles.

Following the likes of Swiss Post in Europe and Amazon in the US, Royal Mail will use autonomous Uncrewed Aerial Vehicles (UAVs) to deliver packages from the UK mainland to the Scilly Isles. Each UAV can carry up to 100kg of mail and Royal Mail will be trialling the technology throughout May and into June. If successful, drones could help capitalise on the new demand for parcel deliveries and, in turn, keep Royal Mail competitive with the likes of Amazon, UPS and DHL. This, in turn, could help the Royal Mail share price continue its positive momentum as the UK emerges from its Covid-19 restrictions.

Will the Royal Mail share price surge continue?

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