The Royal Mail share price has been on an uptrend recently, helped by the huge demand for delivery services. The shares are trading at 476p, valuing the postal group at more than £4.7 billion. They have risen by more than 40% this year and by 290% from their lowest level in 2020.
What happened: The coronavirus pandemic and the ensuing lockdowns have increased demand for package delivery. And recently, companies that deal with such deliveries like Ocado and Royal Mail have benefited substantially.
In its most trading update, the company said that it expects to make an adjusted profit of more than £500 million pounds. It also boosted its full-year revenue by £580 million. Still, analysts question whether the company’s growth will be sustainable as the country reopens and more people return to their offices.
Also, there are questions about its cost overruns. Last week, the firm said that it will keep the 10,000 temporary workers it has hired during the pandemic.
Royal Mail share price forecast
The daily chart shows that the RMG share price has been on a strong upward trend since March last year. The pair has formed a small ascending channel and is currently in the middle. At the same time, oscillators like the MACD and the Relative Strength Index (RSI) have moved to the overbought levels. Therefore, in my view, the uptrend to the upper side of the channel at 530p could continue. However, we should not rule out a pullback as investors take profits.
RMG shares chart