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Author: Alan LittleDate: 2021-03-16

Royal Mail (RMG) +0.32% after Citigroup upgrades price target

Royal Mail’s (RMG) recent resurgence continued on Monday as it closed 0.32% higher in London following another price target upgrade, this time from analysts at Citigroup. 

 

The US bank was impressed by Royal Mail’s trading update last week, which noted that full-year sales would likely soar £900m higher than previously guided. 

 

The rise is due in part to the strength of Royal Mail’s infrastructure and delivery capabilities as more people turn to digital shopping amid coronavirus restrictions in the UK.  

 

The postal service previously said that sales would climb between £380m and £580m year over year. 

 

Royal Mail also expects its adjusted operating profit for the full year to come in at £708m versus the previous forecast of £504m. 

 

Citigroup believes that this bodes well for Royal Mail as it added 35p to a new 600p price target on Monday. 

 

It comes several days after J.P. Morgan hiked its price target to 704p but bullishly claimed that shares could surge past that number in the coming months.  

 

RMG has made gains of 10% during the last month, and The Motley Fool said over the weekend that it would now not hesitate to add the stock to its portfolio following a “transformational” festive period. 

 

Royal Mail now appears to be handling more packages than letters and its new hub will be able to process 1m of the former every day.  

 

The trading update is a good sign for investors looking to buy into Royal Mail, but The Motley Fool noted potential risks in the form of the recent parcel volume surge not holding when the lockdown ends.  

 

On Monday on the London Stock Exchange, Royal Mail’s shares peaked at 10am before eventually finishing up 0.31% at 503.40p. 

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