Royal Mail’s dispute-ending deal with the Communication Workers Union has left as many questions as it has answered, according to Liberum analysts.
Liberum repeated a ‘sell’ rating for the courier, given uncertainty about the deal’s effect on cost savings and productivity for Royal Mail owner International Distributions Services PLC (LSE:IDS).
“We are still sceptical about the execution and implementation risk,” the investment bank noted, adding it was “unclear” if 10% raises and £500 lump sum payments could be funded by the changes set out in the deal.
“Royal Mail is in a better position than it would have been without the deal,” Liberum added.
“However, at best this union deal represents the start of a long and complex restructuring journey that will need to continue far beyond the remaining two-year term of this deal.”
Liberum reiterated IDS’ 135p share price target, down 46% on Monday’s opening of 250.8p.
