Royal Mail share price surges on hopes it could win £550 million contract to deliver Covid tests

Royal Mail’s share price surged nearly 8% today amid heavy trading volumes after reports said it was in a battle with Amazon to win a contract to deliver hundreds of thousands of coronavirus home testing kits.

The company’s shares have been increasingly in investors’ sights as analysts bet record numbers of families would be doing their Christmas shopping online this year amid Covid lockdowns.

Analysts at Citigroup today became the latest to increase their targets on the group’s share price.

Citi upped its target from 210p to 400p, following similar upgrades from other big broking houses last week.

The Sunday Telegraph reported that it was in a scramble with Amazon to win Boris Johnson’s “Operation Moonshot” programme contract to deliver 215,000 home testing kits a day.

The Department of Health has given operators until tomorrow to finalise their bids for the programme that could see up to four tests delivered to each household per day.

The contract value is for £550 million but that could swell to £1 billion. It could also be extended beyond the initial 12 months.

Investors have been warming to the stock since the Spring, with several big investors exiting their short positions.