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Royal Mail shares are bottom of the postie’s bag this morning, investors uninspired by H1 results. A 5% fall in underlying operating profits on revenues +1% may have beaten consensus, and a 5.7% dividend hike and 20% increase in cost cutting plans may well be good news.However, there were no London property disposals (Brexit?) and letter weakness still needs to be offset with growth in the highly competitive parcels arena.
This combination, coupled with some uncertainty ahead of the ‘crucial’ Christmas period, despite much reassuring UK data post Brexit (like those Retail Sales just published!) has served as an excuse for shareholders to extend yesterday’s turn back from resistance at 500p, to test the recent floor around 480p.
Bulls will be hoping for some bargain-hunting to deliver a bounce. Bears will hope the recent envelope trading range was merely a pause before another 50p leg south to test 2-yr rising lows at 440p.
Mike van Dulken, Head of Research, 17 Nov
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