Royal Mail Share Price Keeps Bullish JP Morgan Target Royal Mail Share Price Keeps Bullish JP Morgan Target Royal Mail Share Price Keeps Bullish JP Morgan Target

Royal Mail shares: JP Morgan cuts target price but remains optimistic

Saxo Stories 6 minutes to read

Saxo Group

Summary:  The UK arm of the US investment banking giant JP Morgan has once again revised its broker rating for Royal Mail today. The 500-year-old UK postal service has had its price target cut from 815p to 804p, a downward revision of 1.3%. Nonetheless, this is a minor downward revision that still puts Royal Mail firmly within the "overweight" category, according to JP Morgan, meaning that there is a general consensus that the stock will continue its positive growth trajectory for the near future. If you're considering trading Royal Mail shares at Saxo, read on to find out what is happening with the Royal Mail share price.


Are Royal Mail shares overheated?

Although JP Morgan's price adjustment for Royal Mail is decidedly modest, it could be the beginning of an overdue cooling down for what has been one of the hottest UK stocks of the year. Royal Mail has gone from being dead weight to a clear market favourite in just over a year, with the share price increasing 355% between March 2020 and June 2021, from 133p to 606p.

Since then, this white-hot growth has already cooled off, with the Royal Mail share price declining to 424p per share as of market opening on 1 November 2021. Nonetheless, shareholders remain upbeat. JP Morgan has stuck with its "overweight" rating, while the market consensus among other major investment banks is that Royal Mail will outperform expectations over the next year. It seems that Royal Mail is most definitely still in the good graces of investors.

Does the Royal Mail face another challenging winter?

In JP Morgan's price forecast, it noted that Royal Mail has a few factors in its favour that may push its share price up further. For one, JP Morgan expects letter and parcel volumes to be higher than usual in the coming months, which would be in line with how last winter played out.

For its part, Royal Mail expects its busiest Christmas season ever, which is why it has made moves to hire 20,000 extra workers ahead of the December rush. Furthermore, JP Morgan also acknowledged that Royal Mail is less vulnerable to the inflationary pressures hitting the private mail sector in the UK, especially with regards to the wage inflation that is eating into bottom lines and share prices across the economy right now.

However, it is also worth noting here that Royal Mail's future share price could be weighed down by its public-facing nature, as it is obligated by the British Government to provide a certain level of service across the UK, giving it less flexibility than its competitors.  

Royal Mail's overseas expansion steams ahead

Moving beyond its UK operations, Royal Mail is continuing its unprecedented expansion into overseas markets. On 16 October 2021, Royal Mail completed its acquisition of the Canadian shipping giant Rosenau Transport.

This was part of a £210 million deal in which Rosenau will be used to link Royal Mail's Canadian operations with its services in the United States. If its international expansion continues at this pace, it could certainly bolster its share price back home. 

If you are ready to buy and sell the Royal Mail share price, you can open an account with Saxo and start trading today.

Disclaimer: All trading carries risk. Any past performance stated is not an indication of future performance.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.