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Why did Rolls-royce shares jump up 11.5%?

Rolls-Royce shares shot up sharply at the start of the week after it secured a new 30-year contract with the US Air Force.

Rolls-royce share stock price target ratings analyst trade Source: Bloomberg
  • Rolls-Royce (LON: RR) share price rallied over 11% earlier this week
  • Its North America arm has been selected to power the US Air Force’s B-52 Stratofortress for the next 30 years
  • The aviation engineer’s stock is up 25% in the last one month alone
  • Keen to bet on Rolls-Royce’s rising share price? Open an account with us today to go long on the stock.

Rolls-Royce stock price: what’s the latest?

Rolls-Royce shares spiked up as much as 11.5% this week, after it announced that Rolls-Royce North America has inked up a new deal with the US Air Force.

The aircraft engineer said on Monday that its North American unit has been selected to provide the power plant for the B-52 Stratofortress under the Commercial Engine Replacement Program (CERP).

The tie-up means the American-made Rolls-Royce F-130 engine will power the B-52 for the next 30 years. The Air Force made the announcement after a vigorous multi-year competition.

The F130 and its commercial family of engines have accumulated more than 27 million engine flight hours. A variant of the Rolls-Royce engine selected to power the iconic B-52 is already currently in service with the USAF around the world, powering both the C-37 and E-11 BACN aircraft.

The B-52 CERP win creates demand for 650 engines to be produced at the site and will bring 150 new high-tech, high-skilled jobs for the state of Indiana.

Learn how to buy, sell and short Rolls-Royce shares with IG.

What are analysts’ latest ratings?

The stock is up 25% in the last 30 days, and up 38.6% year to date.

RR has a consensus rating of ‘hold’ and price target of 119p, based on the latest analyst data published by MarketBeat.

The latest price case came from JPMorgan analysts a month ago. They raised their price target on RR to 130p from 105p, on the back of higher earnings forecasts over the next three years.

The firm also predicted that a reported sale of the group’s Spanish unit ITP Aero to consortium-led investment house Bain Capital for a rumoured €1.6 billion (£1.5 billion) could boost free cash flow to around £750 million by 2023.

Finally, the analysts noted that Rolls-Royce’s first half underlying profits for 2021 beat consensus estimates by £536 million, which indicated that its cost-cutting programme is starting to pay off.

Elsewhere, Deutsche Bank analysts also boosted their price target to 116p from 113p, but kept a ‘hold’ rating, while Societe Generale raised its fair value estimate to 100p from 95p alongside a ‘sell’ call.

Take advantage of Rolls-Royce’s soaring share price today

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