Royal Mail share prices soar as City firms revalue business

Royal Mail’s share prices have risen to extraordinary heights, boosted by City firms that have upped their initial valuation of the business.

The government is now under pressure to explain how it could have sold the asset for so little.

Yesterday it emerged that before the sale, JP Morgan advised the government that Royal Mail could be worth up to £10bn, a stark contrast to the final sale price of £3.3bn.

The latest company to give ammunition to critics who say the government sold off Royal Mail at too low a price is stockbroking firm Panmure Gordon, which has now upped its valuation of the service to £5.7bn.

Panmure’s Gurt Zonnevald, the joint head of research at the broking firm, said a week before the flotation that the company could be worth between £3.7bn - £4.5bn.

This week, Zonnevald said: “The exceptional attractiveness of the IPO prompted us to rush into print with a pre-IPO pre-initiation note. Now that the dust has settled we have been able to carry out a more thorough review.

“Despite the strong share price performance since listing, we believe there is still meaningful upside potential on a 12 month view and beyond. We initiate coverage with a buy recommendation and 570p target price.”

In the market the shares have risen to 532p. At their peak since flotation the shares reached 545p.

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