GBPUSD
The Royal Mail share price extended its relentless rally as investors predicted that the ongoing parcel demand will boost its results. The stock has also received important upgrades from analysts at JP Morgan and Citi.
What happened: Royal Mail has emerged as one of the biggest winners of the coronavirus pandemic since it has increased demand for parcels as more people shop online. The company has been so successful that is it is now considering plans to introduce Sunday deliveries. This performance is also being reflected in the company’s share price. The Royal Mail (RMG) share price has jumped by 322% since April last year, pushing its stock to a three-year high.
In a recent note, analysts at Citi said that the stock could even soar to 635p, which is 23% above the current level. It also expects that Royal Mail operating profit to rise to 708 million this year. Citi is not the only one. In a note last week, analysts at JP Morgan said that the stock could rise to 704p, which is about 21% above the current level. They wrote:
“We are not deterred by the strong recent share price move, given the very depressed starting point and step-change in company prospects.”
Deutsche Bank analysts expect that the RMG shares could jump to 708p.
On the daily chart, we see that the RMG share price has been trading in a straight line. It is being supported by the short and long-term moving averages (MA). The Relative Strength Index (RSI) has also remained above 50 in the past few weeks.
Therefore, in my view, I suspect that the Royal Mail share price will continue rallying in the near term. However, we should not rule out a pullback to 500p in the near term.
