Brokers continue to take aim at Royal Mail with Liberum the latest to slash its target price.
The mid-cap specialist broker has axed its target to 205p from 355p, a move explained by a 22-page note on the prospects for the letters and parcels group.
“The deteriorating economic outlook is adverse for revenue forecasts across Royal Mail’s business,” it said.
“Demand for both letters and parcels is economically sensitive. In an economic downturn, letters demand tends to be impacted adversely by lower volumes of transactional mail and reduced advertising spending.
“Parcels demand is mostly driven by online retail activity, where there are clear risks to the downside as tougher economic conditions and inflation squeeze consumer confidence and spending.
“B2B parcel delivery volumes are also exposed to reduced economic activity.
“We see headwinds in both the UK and at GLS.”
In short, the outlook is challenging at the best says Liberum, which is still a seller at today’s price of 263p, down 2%.