Rolls-Royce share price target boosted by JPMorgan

Analysts believe that the aircraft engine maker’s shares, up 8% this year, have more room to grow.

  • Rolls-Royce (LON: RR) shares climbed as much as 1.4% on Tuesday (17 August 2021)
  • JPMorgan analysts lifted their price target on RR to 130pence earlier in the day
  • They also raised their earnings forecasts for the next three years
  • Interested in trading Rolls-Royce shares? Open an account with us to get started.

JPMorgan raises Rolls-Royce stock price target

Rolls-Royce’s share price performance is expected to improve in the coming months on the back of higher earnings, according to JPMorgan analysts.

The analysts lifted their price target on the aviation engineer’s stocks to 130pence a share from 105p, while raising their earnings forecasts over the next three years jump by 49%, 31% and 25% respectively.

The higher forecasts also take into consideration potential structural challenges, including the recovery of long-haul flights, JPMorgan added in a note on Tuesday.

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 €1.6bn (£1.5bn) 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 £536m, which indicated that its cost-cutting programme is starting to pay off.

Rolls-Royce shares rallied as much as 1.4% following JPMorgan’s price target upgrade.

Across the board, Rolls-Royce currently has a consensus rating of ‘hold’ and price target of 198p, based on the latest analyst data published by MarketBeat.

The price target equates to a potential 78% price upside from the stock’s latest price of 111.28p.

What’s your view on Rolls-Royce? Take a position on the stock today

Trade over 16,000 international shares on leverage and Singapore share CFDs from just 0.1% commission with our award-winning platform.* Try CFDs on share dealing risk-free with a demo account.

*Based on the Investment Trends 2018 Singapore CFD & FX Report based on a survey of over 4,500 traders and investors. Awarded the Best Online Trading Platform by Influential Brands in 2020

Rolls-Royce profitable in H1 2021, but 2022 in doubt

Last week, the FTSE 100 company returned to the black, after reporting an underlying operating profit stood of £307 million for H1 2021, a reverse from H1 2020’s £1.63 billion loss.

Underlying revenue, meanwhile, dipped 3.4% to £5.23 billion, from £5.41 billion in the year-ago period.

Rolls-Royce’s resilient defence unit, which makes engines for military jets and powers nuclear submarines, buttressed the group’s 1H 2021 performance.

The aircraft engine maker also said in the same release that it was on track to meeting its forecasts for 2021, with cost reductions and asset sales helping to tide it through a gradual recovery in long-haul travel.

However, Rolls-Royce flagged that its 2022 goals could be delayed, as flying hours did not rebound quickly enough. The group had earlier expected to reach free cash flow of £750 million as early as next year. ‘The exact rate and timing of return is out of our control,’ said Rolls-Royce CEO Warren East.

Nevertheless, the company maintained its guidance for free cash outflow to improve to £2 billion this year, and for cash flow to turn positive in 2H 2021.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.