Royal Mail PLC (LSE:RMG) has been hit with share price target cut by Credit Suisse (NYSE:CS.) due to the low visibility on the parcels business now that more normal trading conditions have returned.
The next update is on 23 September and Credit Suisse is nervous that the normalised revenue position might be materially different to expectations.
Its new target is 581p against 647p previously, though this is still around 18% higher than the current market price of 494.4p.
Credit Suisse is also concerned about how much cash the business will generate given the scale of transformation underway and industrial relation backdrop.
Each 1% of letter parcel/revenue is worth 5% to profits before tax and with a broad range of scenarios feasible ranging from 713p (best case) to 241p (worst case) the shares are fairly valued and a ‘hold’ said the bank.