Royal Mail Share Price Forms Bullish Flag Ahead of Earnings

Summary:

In this Royal Mail share price forecast, we explain why the stock has formed a bullish pennant pattern and what to expect ahead of earnings

The Royal Mail share price is in a tight range as investors focus on the ongoing recovery and the upcoming full-year results. RMG shares are trading at 496p, which is a few points below the year-to-date high of 531p.

What happened: Royal Mail has benefited substantially from the pandemic. It has forced many people to stay at home and embrace online shopping. As a result, the company has benefited because of the vast amount of packages as the number of mail falls. Indeed, the company’s share price has surged by more than 200% in the past 12 months. This makes it one of the best-performing stocks in the UK.

However, recently, the stock price has struggled lately as investors worry about demand. They are unsure whether this demand will keep rising as the UK economy reopens. Therefore, they are focusing on May 20, when the company is expected to publish its full-year results. The management will also provide more colour about demand and provide a guidance for the next quarters.

So, what next for the RMG share price? Analysts have mixed opinions about the RMG stock price. Those at Berenberg have a hold rating on the stock and expect it to drop to 355p. Analysts at JP Morgan expect the stock will rise to 685p while those at Citi expect it to rise to 635p.

Royal Mail share price forecast

The daily chart below shows that the Royal Mail share price has been in a consolidation mode recently. The stock has formed a small triangle pattern that looks like a bullish pennant. Also, it is at the same level as the 25-day moving average while the Average True Range (ATR) has dropped to the lowest level since March this year. This is a sign that the stock’s volatility has dropped. This could be the calm before the storm, which means that the shares could soon break out higher. If this happens, the next key level to watch will be 550p. However, a drop below 480p will invalidate this trend.

Please don’t consider this investment advice. Views expressed here are those of the writer and the writer and InvestingCube will not be held liable for any losses.