Royal Mail slide on cost concerns a buying opportunity says Citibank

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Royal Mail PLC (LSE:RMG) shares have been knocked by investors debating the impact of cost inflation in the near and medium-term, says Citibank.


In the near term, the focus is on agency worker cost ahead of the peak season and concern around wage inflation ahead of the union discussion in 2022.


Citi says it has modelled GBP332mln of cost inflation,(or 5% for the year to March 2023), which should be offset by automation and ongoing cost-saving activities, resulting in flat personnel and non-personnel cost.


In short, the concerns are overdone and the recent weakness is a buying opportunity says the US bank.


Shares are down 16% since the last trading update in September and today eased 0.7% to 497.8p.

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