The Royal Mail Share Price Plummets As UBS Downgrades Stock to a "Sell"

Summary:

Royal Mail share price plummets as UBS downgrades the stock to a "Sell", citing headwinds posed by wage inflation and reduced parcel volumes.

The Royal Mail Group share price may be up slightly this Friday, but the stock continues to face some severe downside pressure after Swiss Bank UBS downgraded the stock to a “Sell”.

UBS has cut its price target from 590p t0 440p, as it expects what it calls “peak uncertainty” around UK parcel volumes to build in Q4 2021. Wage inflation could also be an issue, as negotiations with the company’s union continue ahead of the March 2022 expiry of the current labour union agreement.

The reclassification drove some very aggressive selling on the Royal Mail Group share price, which fell heavily on Tuesday, Wednesday and Thursday by 1.26%, 8.81% and 3.62%, respectively. The stock is slightly up this Friday, gaining 0.66% as of writing but buying momentum remains weak.

Any recoveries could simply be rallies on which cheaper selling opportunities may arise. The immediate resistance lies at 431.2, with an extension towards 442.9 and 452.6 only possible if profit-taking unwinding of short positions takes place.

On the other hand, a resumption of the selloff targets 407.0, with 392.3 forming an additional target to the south.