LONDON, Nov 20 (Reuters) - UBS, one of the bankswhich advised the British government on the sale of Royal Mail, on Wednesday placed a sell recommendation on its sharessaying investors were too optimistic about future margins.
Royal Mail's share price has rocketed by as much as 80percent since Oct. 11, when Britain sold a majority stake in thenear 500-year-old firm, sparking criticism from unions andopposition lawmakers that it has been sold off too cheaply.
On Wednesday shares in the firm were down 1.9 percent to539.5 pence, still 63 percent above its 330p issue price.
UBS issued a sell rating, giving a target price of 450pafter it said the market was over-estimating the amount thatRoyal Mail can grow its margin by.
"We believe the market is over-estimating margin upside,"UBS said in a note to clients. It had not rated Royal Mailbefore its sell recommendation.
Bankers from UBS and Goldman Sachs, which managed theinitial public offering, will go before the Business Innovationand Skills committee to explain their valuations of Royal Mailon Wednesday.
They will be joined by bankers from Citigroup,Deutsche Bank, JP Morgan and Panmure Gordon, none of whom worked on the listing, but gave highervaluations, according to local media reports. (Reporting by Neil Maidment; Editing by Guy Faulconbridge)