Analysts at Barclays see more than 20% upside to the Royal Mail PLC (LSE:RMG) share price ahead of next month’s trading update.
Barclays today lifted its price target to 640p, compared to a prevailing market price of 521.5p, as the investment bank noted a positive recent performance and looks ahead to anticipated growth through the coming financial year.
“We expect solid Christmas trading,” Barclays said in a note.
“UK domestic volumes continue to be supported by antigen testing kits, which have grown on the back of the emergence of the Omicron variant.”
Royal Mail is due to release a trading update for the nine months to December 26 on February 10.
Barclays is the latest among a number of blue-chip institutions to show a bullish view on the formerly national postal firm after Berenberg, in December, upgrading its recommendation to ‘buy’ from ‘hold’ and its price target to 650p from 530p.
“With the stock trading on extremely low multiples and headwinds very well flagged, we think the risk/reward now appears more attractive on a 12-24 month view than we have ever seen it for the company.”
In fact, Berenberg said the shares look ‘excessively cheap’ on an enterprise multiple of just five times.